According to BrokerCheck records kept by the Financial Industry Regulatory Authority (FINRA), a customer alleged in February 2018 that Pronovost engaged in unsuitable investments. Another customer alleged in March 2018 that Pronovost engaged in unsuitable investments and misrepresented the investor’s needs.
Pronovost allegedly sold the LJM Preservation and Growth Fund to multiple customers (LJMAX, LJMCX, LJMIX). Investors may have been unaware of the risks associated with this investment, as the fund’s name belies its risky strategy. Gana LLP has already filed a case against Cambridge Investment Research, Mr. Pronovost’s employer for the sale of the LJM Preservation and Growth Funds.
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.
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.
Pronovost has spent 28 years in the securities industry and has been registered with Cambridge Investment Research since 2008. Previous registrations include MML Investors Services (1996-2008) and GR Phelps & Company (1989-1996). He is registered with 31 US states and territories.
If you have suffered investment losses in a LJM Preservation and Growth Fund offering, Gana LLP’s investment fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts do to claims of unsuitability and duty to supervise. 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.