Unsuitable Investment Recommendation Attorney - Law Offices of Robert Wayne Pearce

Mar 23, 2018

Cetera Broker Suspended for Unsuitable Recommendation & Risky Trading Strategy

Richard Foster, a former registered representative with Cetera Investment Services LLC (Cetera) submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $10,000 by the Financial Industry Regulatory Authority (FINRA) for making an unsuitable recommendation that his customer liquidate his IRA to be utilized in a high-risk options trading strategy. According to FINRA, Richard Charles Foster, of Tulsa, Oklahoma, recommended his customer place the entirety of his IRA assets into a high-risk, unsuitable options trading strategy. Mr. Foster allegedly received authorization from his member firm to operate an income fund by falsely representing that the fund would not involve any customers. However, Mr. Foster recommended his customer liquidate his IRA, worth $169,000 to invest in the income fund account. The income fund account lost significant value due to trading losses and the commission costs connected with the high-volume ETF option trading strategy. FINRA stated that once Mr. Foster’s customer learned he had incurred an $81,000 tax penalty because of the early IRA liquidation, he asked Mr. Foster to return what was left of his funds to pay the penalty. Mr. Foster returned $52,000 to the customer – a significant loss of the initial investment of $169,000.

Feb 23, 2017

LPL Financial Broker Suspended for Unsuitable Recommendations to Elderly Widow

Scott Goldman, a stockbroker formerly registered with LPL Financial Corporation (LPL Financial), submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined $10,000 and suspended for 20 days for allegedly making unsuitable recommendations of a leveraged, overconcentrated precious metals investment to an elderly widow. According to FINRA, Mr. Goldman used several different investment strategies (referred to as “Champion Models” by Mr. Goldman) in which he invested his customers’ accounts in mutual funds with a mutual fund family or through subaccounts of a variable annuity. FINRA found that one of Mr. Goldman’s Champion models was the “Champion Precious Metals Model,” which was identified as the most risky due to the fact that it was concentrated in the volatile precious metals sector. Further, the Champion Precious Metals Model used leveraged mutual funds, furthering the risk to investors.

Jan 30, 2017

Former Dawson James Broker Suspended for Unsuitable Investment Recommendations

Kevin Barbalace, a former registered representative with Dawson James Securities, Inc. (Dawson James) submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $5,000 by the Financial Industry Regulatory Authority (FINRA) for making unsuitable investment recommendations which resulted in more than $7,000 in net losses to his customer. According to FINRA, Kevin Lawrence Barbalace, of Baltimore, Maryland, recommended and made 46 trades in his customer’s IRA account and 8 trades in the same customer’s regular account which resulted in an excessive concentration of low-priced stocks which were highly volatile and unsuitable for his customer in light of the customer’s financial needs and risk tolerance. FINRA stated that one of the securities transactions made by Mr. Barbalace lost more than half its value in one month, and another lost nearly 80% of its value in less than two months. When Mr. Barbalace’s customer transferred the accounts from Dawson James, a loss of more than $7,000 was incurred as a result of the unsuitable recommendations and trades made by Mr. Barbalace.