According to BrokerCheck records kept by the Financial Industry Regulatory Authority (FINRA), A customer alleged in June 2016 that Nicolas engaged in unsuitable investments and churning and alleged failure to supervise on the part of Garden State Securities, Inc.
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.
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades.
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.
Nicolas entered the securities industry in 2008 and has been registered with Garden State Securities, Inc. since then.
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.