The securities attorneys at Gana Weinstein LLP are investigating claims against CUNA Brokerage Services, Inc. (CUNA Brokerage) broker Matthew Paolucci (Paolucci). According to BrokerCheck records, Paolucci has been subject to three customer complaints, one of which is still pending. The majority of these complaints concern recommendations of unsuitable investments.
Most recently, in September 2017, a customer alleged that from 2008 to 2015, Paolucci recommended unsuitable investments from a wide range of securities. The customer has requested $200,000 in damages. This dispute is currently still pending.
In July 2016, a customer alleged that in 2012, Paolucci recommended unsuitable recommendations in oil and gas securities. The customer requested $18,829.27 in damages.
Our firm often handles cases involving alternative investments such as oil and gas offerings, direct participation products, Non-Traded REITs, equipment leasing products, and so on. These products are almost always unsuitable for investors. The brokers who sell these investments are paid additional commission in order to hype inferior quality investments. These commissions end up providing a perverse incentive by brokers to create an artificial market for products that no honest advisor would sell.
Brokers are required to advise suitable investments for the customer by following certain criteria. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s research 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 Paolucci 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.
Paolucci has been in the securities industry for 18 years and has been registered with Cuna Brokerage since 2016. From July 2013 to October 2016, Paolucci was registered with American Independent Securities Group, LLC. From August 2007 to July 2013, he was registered with Geneos Wealth Management, Inc. From May 2004 to August 2007, he was registered with Valic Financial Advisors, Inc. From December 2001 to June 2004, he was a registered representative at American Express Financial Advisors, Inc.
Investors who have suffered losses may be able recover their losses through securities arbitration. The investment attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.