According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Joann Cadovich (Cadovich), currently associated with Glp Investment Services, LLC, has at least one disclosable event. These events include one customer complaint, alleging that Cadovich recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a settled customer complaint on May 01, 2023.
On May 1, 2023, the client called the Firm to share her frustration regarding her account’s poor performance, namely the drop in value between October 2021 and October 2022 due to the overall decline in the markets. The client was not sure how to handle her disappointment as she admits she should have paid closer attention to her statements and asked more specific questions about the investments in her account. \, On or about October 12th, 2021, the client reached out to the RR asking why she was in growth and income funds versus something more conservative with lower risk. The client’s account documents indicate that she desired a ‘moderate’ risk tolerance. Her account positions were consistent with this ‘moderate’ risk tolerance. The client in consultation with the RR made the decision to move four (4) of the growth funds’ balances into an existing position in the account- the 2035 Target Date Fund -to further reduce the risk profile of the account. \, On or about October 19th, 2022, the client emailed the RR about additional losses in her account, again citing that she had requested it be more conservative with little risk. The client never expressed that she was interested in ‘no growth ‘ or ‘no risk’. The RR stated that the account was now more conservative due to the move into the 2035 Target Date Fund as compared to the pre-existing Growth Funds. However, the client states she was insistent that she wanted less risk and felt the RR should have recommended other, more conservative fund options. She felt the RR did not offer her additional alternatives at the time, like a money market or annuity. An annuity would not have been appropriate for her newly stated ‘no to little risk’ goals nor for her re-stated time horizon (4-6 years).\, The Firm reviewed these concerns with the RR. The RR believed the client was in a more conservative position and acknowledged that the prior year was challenging for both more conservative funds and growth funds. However, even given the client’s concerns and questions, the RR did not suggest a move to a money market funds (or similar).\, After discussion with the client and review of the allegations, the Firm, solely to maintain good client relations, made the decision to work with the client and accordingly, the Firm made corrective, as/of trades to move her assets to a money fund effective back to 10.19.2021.\, The client agreed to and is currently satisfied with this remedy. The Firm does not believe that the RR engaged in any wrongdoing or that there was a violation of any securities rules or laws. In any event, the Firm has counseled the RR to be more effective in the communication of risk scenarios and alternative product offerings to clients to avoid future similar allegations.
Financial Advisors providing advice to retail investors are required to adhere to the SEC’s Regulation Best Interest (Reg BI). Reg BI applies a ‘best interest’ standard for broker-dealers and their associated people. This standard applies when a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or accounts. This Reg BI standard of care applies to registered representatives making recommendations to customers in the purchase, sale, or exchange of securities or the implementation of investment strategies involving securities and non-securities. The rule also applies to the handling of opening accounts such as account transfers and types of accounts being recommended to be opened.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. The SEC has stated that Reg BI is drawn from fiduciary principles that are common to both brokers and investment advisors including an obligation to act in the investor’s best interest and prohibiting an advisor from placing their own interests ahead of the investor’s. Reg BI comes with different core obligations that brokers must comply with. There is the duty of care obligation requiring financial advisors to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest among other duties. In order to do that the broker must evaluate the potential risks, rewards, and costs associated with a product, account type, or series of transactions being recommended.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. Finally, the advisor must use their knowledge of the first two elements to consider reasonably available investment option alternatives and come to the conclusion that there is a reasonable basis to believe that the recommendation or advice being provided is in the retail investor’s best interest. Finally, an advisor must also analyze the specific account features offered and determine whether their client can benefit from them in order to meet their care obligations. While securities and investments come with costs that must be considered, the type of securities account also has changes the cost equation for the investor and can change the retail customers’ future investment returns. The associated person must consider the different types of securities accounts for their client and determine whether or not the cost or features are reasonably needed for the client or if the customer’s current account costs and features are superior to solutions available to the advisor. In any event, the type of account and services recommended must be in the investor’s best interest.
Cadovich entered the securities industry in 1994. Cadovich has been registered as a Broker with Glp Investment Services, LLC since 2011.
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.