According to BrokerCheck records kept by the Financial Industry Regulatory Authority (FINRA), former Newbridge Securities and Allstate broker David Faline (Faline) has been subject to three customer disputes.
A customer alleged in June 2017 that Faline made unsuitable investment recommendations that resulted in losses in the customer’ account. The customer is seeking $200,000 in the pending dispute.
In February 2014, a customer alleged Cox recommended unsuitable investments, made false and misleading statements, negligently misrepresented material facts and breached his fiduciary duty. This dispute settled for $9,000.
The number of events listed on Adcock’s BrokerCheck is high relative to her 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.
All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.
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 ignore or disregard red flags and must act decisively to detect and prevent improper activity.
Faline was previously registered with Gruntal & Co., JWGenesis Securities, Prudential Securities Inc., Ladenburg, Thalman & Co., Brookstreet Securities Corp, High Mark Securities, Allstate Financial Services, JP Turner, Newbridge Securities Corp, National Securities Corp, Aura Financial Services, and most recently Allstate Financial Services.
Gana LLP’s investment fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts due to claims of unsuitability and misrepresentation. 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.