Michael Spolar Sanctioned By FINRA Over Unauthorized Trading

shutterstock_175137287-300x200According to BrokerCheck records Michael Spolar (Spolar), now associated with International Assets Advisory, LLC (IAA), has been sanctioned by The Financial Industry Regulatory Authority (FINRA) over allegations that Spolar exercised discretion in customers’ accounts that were non-discretionary accounts.  Since according to FINRA Spolar did not obtain written authorization from these customers to exercise discretion in their accounts and his member firms did not approve these accounts for discretionary trading, these trades were unauthorized.  FINRA found that while Spolar stated that he discussed strategy with these clients and he received verbal authority for the trades.  However, when the firm discovered the activity Spolar was terminated. FINRA also found that when Spolar moved to a different brokerage firm he continued to exercise discretion in customer accounts despite his prior termination for the same conduct.

In addition to the FINRA sanctions Spolar has been subject to eight customer complaints, one termination, and one financial disclosures including a bankruptcy filing in December 2015.  Some of the complaints against Brodt allege securities law violations including that the broker engaged in unauthorized trading among other claims.

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 complaints against Spolar are unusual compared to his peers.  According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015.  Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters.  However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher.  Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.

Spolar entered the securities industry in 1991.  From October 2008 until March 2013 Spolar was associated with Morgan Stanley.  From February 2013 until May 2015, Spolar was associated with LPL Financial LLC.  Since April 2015 Spolar has been associated with IAA out of the firm’s Orlando, Florida office location.

At Gana LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts.  Claims may be brought in securities arbitration before FINRA.  Our consultations are free of charge and the firm is only compensated if you recover.