Advisor Joel Davidman Sanctioned By Regulator Over Trading Activity

shutterstock_189135755-300x300The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Joel Davidman (Davidman), currently employed by Stifel, Nicolaus & Company, Incorporated (Stifel Nicolaus) has been subject to at least three customer complaints, one employment termination for cause, and two regulatory actions during the course of his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), Davidman’s customer complaint alleges that Davidman recommended unsuitable investments in a variety of investment products including bonds among other allegations of misconduct relating to the handling of their accounts.

In May 2015 Davidman’s employer Morgan Stanley discharged Davidman alleging that the representative engaged in discretionary trades in a client’s account without authorization.

Thereafter, FINRA investigated the allegations and in July 2017 suspended Davidman after alleging that he consented to sanctions and findings that he exercised discretionary trading authority in the accounts of customers without obtaining prior written authorization from each of the customers or approval from his member firm to treat the customers’ accounts as discretionary. FINRA found that Davidman effected some of the trades using time and price discretion and the remaining occurred without Davidman discussing and receiving approval for the trades from the customers on the dates of the transactions.

Advisors are not allowed to engage in unauthorized trading.  Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b).  These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.

According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined.  Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases.  In addition, research has show a disturbing pattern with troublesome brokers where brokers with high numbers of customer complaints are not kicked out of the industry but instead these brokers are sifted to lower quality brokerage firms with loose hiring practices and higher rates of customer complaints.  These lower quality firms may average brokers with five times as many complaints as the industry average.

Davidman entered the securities industry in 1981.  From June 2009 until June 2015 Davidman was associated with Morgan Stanley.  Since June 2015 Davidman has been registered with Stifel Nicolaus out of the firm’s Los Angeles, California office location.

Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation.  At Gana Weinstein 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.

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