Broker Investigation: Claims Against Broker Swan Sihua Shen

shutterstock_132704474-300x200The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Swan Sihua Shen (Shen) also known as Swan Sihua Zhang. According to BrokerCheck records there are at least six disclosures on Shen’s record including customer complaints, multiple regulatory actions, and one employment separation from CUNA Brokerage Services.

The most recent regulatory action against Shen was filed by the Maine office of Securities in October 2016 alleging that she failed to disclose history records so as a result was ordered for heightened supervision for 2 years.

In February 2015, the State of Massachusetts filed a claim against Swan Shen alleging that she repeatedly violated firm policies by copying and pasting client signatures, and altering forms which was precipitated by her termination from CBS in August 2013.
In August 2014, FINRA sanctioned Swan Shen following allegations that she copied and pasted customers’ signatures onto updated forms and resubmitted them. Ms. Shen was placed on a one-month suspension and was issued a fine of $5,000.

Shen entered the securities industry in 1998. These are the following firms Shen has been associated with throughout her career:

• CUNA Brokerage Services, Inc. (April 2001 – September 2013)
• Capital Financial Services, Inc. (November 2013 – December 2013)
• Cantella & Co., Inc. (February 2014 – March 2014)
• Capital Financial Services, Inc. – Burlington, MA branch (October 2014 – Present)

Brokers in the financial industry have the fundamental responsibility to treat investors fairly. This obligation includes making suitable investments for their client. The suitability analysis has certain requirements that must be met before the recommendation is made. First, the brokerage firm must be reasonable basis for the recommendation for the investment based upon the broker’s and the firm’s investigation and due diligence into the product offered. Common due diligence practices require the brokerage firm to look into the investment’s properties including its benefits, risks, tax consequences, the issuer, the likelihood of success or failure of the investment, and other relevant factors.

Second, if there is a reasonable basis to recommend the product to investors the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives. These factors include the client’s age, investment experience, retirement status, long or short term goals, tax status, or any other relevant factor.

A brokerage firm owes a duty to all of its customers to properly monitor and supervise its employees. The duty to supervise is a critical component of the securities regulatory scheme. Regulatory authorities such as the SEC and FINRA have steadily heightened the supervisory obligations of brokerage firms in recent years. Supervisors have an obligation to respond vigorously to indications of irregularity, often times referred to as “red flags.” A supervisor cannot disregard red flags and must act decisively and specifically prevent improper conduct by their brokers. The importance of proper supervision is manifested in various types of securities activities. Brokerage firms are responsible for monitoring a broker’s investment recommendations to clients, outside business activities, and representations to investors among other obligations. In addition, brokerage firms are responsible for conducting due diligence on the securities products they sell and devising a written supervisory system to achieve compliance with the securities laws.

Gana LLP’s securities fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts due to claims of fraud and negligence. 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.