FINRA Bars Former National Securities Corporation Broker John Labarca

shutterstock_101394817The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against former National Securities Corporation (National Securities) broker John Labarca (Labarca).  According to BrokerCheck records Labarca was barred from the securities industry in February 2016 after he refused to provide information and documents requested by FINRA in connection with its investigation of allegations made against Labarca in a statement of claim filed by a customer.

Labarca has been subject to at least three customer complaints and one financial disclosure that was a bankruptcy filing.  Such disclosures on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services.  A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.  The customer complaints against Labarca allege securities law violations that including unsuitable investments, unauthorized trading, and breach of fiduciary duty among other claims.

According to a recent study conducted by the Securities Litigation and Consulting Group entitled “How Widespread and Predictable is Stock Broker Misconduct?” the incidents of investor harm at National Securities is extraordinarily high.  The study ranked National Securities as the third worst brokerage firm finding that brokers at the firm had over a 31% misconduct rate.  The study stated that investors should stay away from National Securities “Given their coworkers’ disclosure record as of 2014, 83.7% of the brokers at these six firms would be in the highest risk quintile as defined in the FINRA study and should be avoided by investors. The BrokerCheck reports for most of the brokers at these six firms should prominently display a skull and crossbones warning.”

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 events listed on Labarca brokercheck 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.

Labarca entered the securities industry in 1991.  From June 2006 through February 2010, Labarca was associated with Wells Fargo Advisors, LLC.  From February 2010 until February 2016, Labarca was associated with brokerage firm National Securities out of the firm’s Edison, New Jersey office location.

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.