Broker Investigation: Customer Complaints Against Advisor Paul Blum

shutterstock_145368937The securities fraud lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Paul Blum (Blum). According to BrokerCheck records Blum has been the subject of at least eight customer complaints three of which have been filed since 2015. The customer complaints against Blum allege a number of securities law violations including that the broker made unsuitable investments, and excessive trading among other claims.

The most recent customer complaint filed in December 2015 and alleged negligence in recommending the purchase of bonds that defaulted from February 2009 until April 2014 claiming $450,000 in damages. The claim is still pending. In November 2015, another client filed a complaint alleging Blum invested in high yield bonds without consultation between May 2013 and May 2014 resulting in $133,000 in damages. The dispute is currently pending.   In a third complaint filed in November 2015, an investor claimed that Blum invested in appropriate bonds from 2005 through 2015 causing $140,000 in damages. The claim was settled.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

The number of customer complaints against Blum 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.

Blum entered the securities industry in 1981. From October 2009 until November 2015 Blum was associated with RBC Capital Markets, LLC out of the firm’s West Palm Beach, Florida office locations.

The investment fraud attorneys at Gana LLP represent investors who have suffered securities losses due to the mishandling of their accounts. 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.