Securities Lawyers Blog
According to BrokerCheck records financial advisor Paul Mante (Mante), employed by The GMS Group, LLC (The GMS Group), has been subject to eight customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA) Mante has been accused by a customers of unsuitable investment advice concerning recommendations to invest in Puerto Rico bonds. Puerto Rico has been devastated by a $70 billion debt it cannot pay in addition to extensive hurricane damage. However, according to news reports, the process to resolve Puerto Rico’s debts could take years.
In January 2018 a customer filed a complaint alleging that Mante violated the securities laws by, among other things, making misrepresentations of Puerto Rico bonds for the period of May 2014 through to December 2017. The complaint alleged $1 million in damages and was settled for $450,000.
In January 2018 a customer filed a complaint alleging that Mante violated the securities laws by, among other things, that the broker negligently recommended and misrepresented the safety of the Puerto Rico bonds from the time period of May 2013 through to September 2014. The complaint alleged $40,000 in damages and was settled for $13,500.
Brokers have recommended Puerto Rico bonds over the past decade as an attractive high yielding investment that is triple-tax free – meaning interest earned is free of federal, state, or local taxes. But brokers in the financial industry have to understand more than just the yield on a bond and its tax benefits. Brokers must make recommendations that are suitable for their client. The suitable analysis has certain requirements that must be met before the recommendation is made. First, there must be reasonable basis for the recommendation for the investment based upon the broker’s and the firm’s investigation and due diligence. Common due diligence looks into the investment’s properties including its benefits, risks, tax consequences, the issuer, the likelihood of success or failure of the investment, and other relevant factors. Second, if there is a reasonable basis to recommend the product to investors the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives.
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.
Mante entered the securities industry in 2005. Since 2005 Mante has been associated with The GMS Group out of the firm’s Boca Raton, Florida office location.
Gana Weinstein LLP’s securities attorneys represent investors who have suffered securities losses due to the mishandling of their accounts and recommendations to purchase Puerto Rico bonds. 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.