FINRA Sanctions Broker Andrew Corbman Over Unsuitable Investments

shutterstock_175298066The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against former Kovack Securities Inc. (Kovack Securities) broker Andrew Corbman (Corbman).  According to BrokerCheck records Corbman was suspended from the securities industry in February 2016 after FINRA found that he made recommendations that were unsuitable as they were over-concentrated and exposed customers to a risk of loss that exceeded each customer’s risk tolerance and investment objectives.  FINRA found that Corbman also distributed a sales brochure for an alternative mutual fund to his customers that contained information that was misleading.

In addition, Corbman has been subject to at least nine customer complaints, two judgements or liens totaling over $100,000, one bankruptcy filing, and an employment separation for cause.  In 2011 his former employer FSC Securities Corporation terminated Corbman alleging that he used unapproved advertising an email accounts.  The bankruptcy and lien 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.

In addition, Kovack Securities brokers have been found to be extremely dangerous for investors to trust with their money.  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 Kovack Securities is extraordinarily high.  The study ranked Kovack Securities as the sixth worst brokerage firm finding that brokers at the firm had over a 28% misconduct rate.  The study stated that investors should stay away from Kovack 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 Corbman 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.

Corbman entered the securities industry in 1994.  From February 2008 through January 2011, Corbman was associated with FSC.  From January 2011 until November 2015, Corbman was associated with brokerage firm Kovack Securities.  Finally from November 2015 until March 2016, Corbman was associated with Newbridge Securities Corporation out of the firm’s Lansdowne, Virginia 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.