The Financial Industry Regulatory Authority (FINRA) has filed a complaint against broker Allen Green (Green) concerning allegations that Green violated FINRA’s suitability rule by making unsuitable recommendations to a disabled customer, and also by having no reasonable basis to recommend non-traditional exchange traded funds (Non-traditional ETFs) to his customers.
Green has been in the securities industry since 1976 and also has been a registered principal since 2003. From May 2006, until November 2009, Green was associated with Cullum & Burks Securities, Inc. Thereafter, from November 2009 until April 2013, Green was registered with Royal Securities Company (Royal Securities). According to FINRA, Green was the supervising principal for one of Royal Securities’ Michigan branch offices and did business in that branch under the name A Green Financial Group.
FINRA alleged in the complaint that Green believed that the world economy was on the precipice of catastrophe and that certain asset classes would increase in value due to the resulting “world chaos” that would result. As a result of his view, FINRA alleged that Green recommended to virtually all of his customers that they invest almost exclusively in securities with exposure to precious metals, natural resources, commodities, and energy as part of a comprehensive investment strategy.
FINRA found that in recommending this investment strategy, Green focused on one potential risk of economic collapse of the monetary and financial system as we know it and failed to account for any other risks such as the economy may not collapse. FINRA alleged that Green thought that his strategy was the only “safe” and “conservative” investment strategy but realized that such a portfolio could not be implemented for a customer who identified a conservative, or even a moderate, investment objective and risk tolerance. In order to recommend his strategy, FINRA alleged that Green told his customers and potential customers that an aggressive investment objective identification was necessary if they wanted to become his customer.
In the case of one customer, the client was involved in a car accident when she was 27 years old that resulted in brain injuries leaving her permanently disabled and unable to work because the customer suffered from cognitive impairments affecting her memory. Through another broker, the customer initially invested $1 million in a combination variable/fixed annuity. In late 2006, Green and the customer had discussions where Green provided his presentation about the coming world monetary crisis. According to FINRA, Green claimed that his strategy would result in a better rate of return than the annuity and would make so much money “she would think he was a god.”
Even though the customer indicated that the money funding the account was all the money she had in the world and could not afford to lose it, FINRA alleged that Green recommended an investment objective of Growth and Aggressive Growth that indicated a willingness to assume a high level of risk. FINRA alleged that Green’s recommendations in his bear strategy caused a concentration in that strategy including penny stocks. In September 2010, the customer transferred her account to another representative at another firm with only an account balance of only $134,891.37.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors in cases of unsuitable investment strategies. Our consultations are free of charge and the firm is only compensated if you recover.