According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Charles Bonilla (Bonilla), previously associated with Pruco Securities, LLC., has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Bonilla recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a settled customer complaint on November 23, 2021.
Unsuitability, misrepresentation/omissions
FINRA BrokerCheck shows a final customer complaint on February 08, 2021.
Without admitting or denying the findings, Bonilla consented to the sanctions and to the entry of findings that he recommended that his customers invest in securities without having a reasonable basis to believe those investments were suitable. The findings stated that Bonilla recommended investments in a mutual fund created for customers of his member firm. Bonilla did not perform reasonable diligence on the fund prior to recommending it to customers. Bonilla could describe little about the fund’s underlying holdings, beyond that some of the holdings were midstream energy companies. Bonilla did not know how the fund paid its monthly distributions or what, if any, diligence his firm performed on the fund or its holdings prior to offering shares of the funds to customers. Without sufficient understanding of these fundamental features or risks of the fund, Bonilla recommended that his customers collectively invest over $250,000 in the fund, for which he received $4,355.72 in commissions. The fund’s net asset value declined by more than 40%. Bonilla also recommended illiquid investments in a limited partnership sold to customers of his firm. Bonilla did not perform reasonable diligence on the partnership prior to recommending the investment to customers. Bonilla did not know how the partnership generated funds to pay investors monthly distributions or how the price of the common units reflected on customer account statements were calculated. Bonilla did not real the full prospectus nor did he review the partnership’s financial statements. Without a sufficient understanding of fundamental features and risks of the partnership, Bonilla recommended that his customers collectively invest over $650,000 in the partnership, for which he received $18,061.31 in commissions. Later, the partnership notified its common unit holders that it was suspending distributions until further notice.
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 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. 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.
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 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 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.
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. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest. Brokerage firms and advisors must also understand the features and limitations of various account types as part of meeting Reg BI’s care obligations. Firms typically offer a variety of account options and services with different trading costs, services, such as account and activity monitoring. An advisor’s recommendation as to what type of securities account to open can alter the customers’ overall costs and investment returns. The advisor must determine that the client can benefit from the type of account being recommended to be opened and in the investor’s best interest taking into account the costs, benefits, and needs of the client.
Bonilla has been in the securities industry for more than 21 years. Bonilla has been registered as a Broker with Pruco Securities, LLC. since 2018.
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.