Broker Investigation: Claims Against Broker John Stapleton

shutterstock_20354398According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker John Stapleton (Stapleton) has been the subject of at least 2 customer complaints, 1 regulatory action, and 6 judgements or liens. Customers have filed complaints against Stapleton alleging securities law violations including misrepresentations of investments among other claims.

In 2005 the NASD brought action against Stapleton alleging that the broker committed securities fraud and made unsuitable investments while exercising control over the purchases and sales in a client’s account. The NASD found that Stapleton did not have a reasonable basis to believe that the purchases and sales in the account were suitable for the customer given the size and frequency of the transactions and the customer’s circumstances.

In addition, Stapleton has had difficulty managing his own finances and on April 16, 2014, disclosed a tax lien of $105,7191, on December 6, 2013, disclosed a tax lien of $12,478, on April 23, 2012, disclosed a tax lien of $1,592, on January 25, 2012, disclosed a tax lien of $9,642, on August 10, 2010, disclosed a tax lien of $121,506, and on March 27, 2009, disclosed a tax lien of $11,180. Judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Stapleton entered the securities industry in 1997. From December 2005, until May 2010, Stapleton was registered with JHS Capital Advisors, Inc. From May 2010, until August 2013, Stapleton was a registered representative of Rockwell Global Capital LLC. Finally, since August 2013, Stapleton has been associated with Craig Scott Capital, LLC out of the firm’s Uniondale, New York office location.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

The number of customer complaints against Stapleton is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

Gana LLP represents investors who have suffered investment losses due to broker wrongdoing, such as unsuitable investments. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.