On July 15, 2014, FINRA suspended Frank N. Dettenrieder, a former financial adviser with First Allied, for twelve days and fined him $5,000 for effectuating discretionary transactions in the accounts of six customers without obtaining prior written authorization from the customers and without having the accounts accepted as discretionary accounts by First Allied in violation of FINRA Rule 2510(b). FINRA Rule 2510(b) disallows registered representatives from exercising discretionary authority in customer accounts without prior written authority.
Under FINRA Rules, financial advisors can either have discretionary accounts – accounts in which the broker has discretion to make purchases without prior approval from the investor – and non-discretionary accounts – accounts in which the broker must obtain prior approval before purchasing securities. In any event, to create a discretionary account the broker must obtain the investors written consent.
FINRA also explained that Mr. Dettenrieder’s conduct violated FINRA Rule 2010. FINRA Rule 2010 requires that all registered representatives “observe high standards of commercial honor and just and equitable principles of trade.”
Mr. Dettenrieder has been in the securities industry since 1969 and has worked First Allied since 2008. First Allied has since terminated Mr. Dettenrieder. According to his CRD, First Allied terminated Mr. Dettenrieder because he “violated firm policy by exercising discretion in customer accounts without written authorization.”
However, First Allied has had its share of regulatory violations in the past. On March 5, 2010, for example, the SEC charged First Allied with failing to reasonably supervise one of its registered representatives who engaged in unauthorized fraudulent trading in the accounts of two Florida municipalities.
Moreover, First Allied may still be responsible for failing to properly supervise Mr. Dettenrieder under FINRA Rule 3010 which states that, “Each member shall establish and maintain a system to supervise the activities of each registered representative, registered principal, and other associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable NASD Rules. Final responsibility for proper supervision shall rest with the member.” Here, it could be argued that First Allied failed to properly supervise Mr. Dettenrieder.
If you or anyone you know invested with First Allied or Frank Dettenrieder you should contact Gana LLP immediately so that we can ascertain whether you have a case. Our seasoned arbitration attorneys will review your account statements and forensically analyze your claim to determine whether you have a viable case. Our nationally recognized law firm represents investors all over the country in complex securities arbitrations and litigations. Our collective experience has resulted in millions of dollars in settlements and verdicts. Our regular contact and detailed approach to your case sets us apart from other attorneys in this area of law.