According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Scott Trease (Trease), previously associated with Sapere Wealth Creation, LLC, has at least one disclosable event. These events include one customer complaint, alleging that Trease recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a award / judgment customer complaint with a damage request of $100,000.00 on March 22, 2023.
The allegation in this civil matter is breach of fiduciary duty in violation of Section 206(2) of the Advisers Act. Mr. Trease, along with Sapere Wealth Management LLC (‘Sapere’), entered into Consent Agreements with the SEC reflecting the resolution of a civil matter. Both Mr. Trease and Sapere consented to the entry of a final judgment as part of a settlement of the civil case. In connection with the Consent Agreements, the SEC prepared and filed a complaint, describing the government’s allegations giving rise to the Agreements. Both Mr. Trease and Sapere, without admitting or denying the allegation of breach of fiduciary duty in the Complaint, consented to entry of a final judgment permanently restraining and enjoining violation of fiduciary duty and ordering compliance with a conduct-based injunction. Mr. Trease has consented to paying a civil penalty in the amount of $100,000 under Section 209(e) of the Investment Adviser Act of 1940. In connection with this matter, Mr. Trease mistakenly relied on an individual who convinced him of his sophisticated investment experience and financial acumen, along with his sincere profession of the Christian faith. The Order and Final Judgment was entered on April 26, 2023.
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. Reg BI applies when brokers recommend a retail investor engage in securities transaction or an investment strategy involving one or more securities. Reg BI also applies to financial advice concerning the transfer of funds and opening of accounts. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types of accounts.
Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. The Reg BI rule applies a fiduciary principles and requires an associated person to act in the retail investor’s “best interests” while barring the broker from placing their own financial interests and compensation incentives ahead of the investor’s best interest. Reg BI comes with different key obligations that associated persons must meet in dispensing advice. The care obligation requires registered representatives to carefully evaluate investment options, review the risks and rewards of the investment or service, compare similar products, and ensure that the recommended investment is appropriate for the customer and in the retail investor’s best interest.
Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonably understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. The associated person must then apply both their reasonable diligence into various investment options as well as the information gathered as to the investor’s specific needs when considering the investment recommendation. The broker must explore various alternative investment options available to address these needs and determine that there is a reasonable basis to believe that the recommendation or service being recommended is in the retail investor’s best interest. An advisor must understand the type of account, securities, and their client in order to meet their care obligations. The type of securities account has the potential to greatly affect retail customers’ costs and investment returns. Different types of securities accounts can offer different features, products, or services, and not all types of accounts or services would be in every investor’s best interest.
Trease has been in the securities industry for more than 23 years. Trease has been registered as a Broker with Sapere Wealth Creation, LLC since 2003.
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.