According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Steven Pagartanis (Pagartanis), previously associated with Lombard Securities Incorporated, has at least 3 disclosable events. These events include 2 customer complaints, one regulatory event, alleging that Pagartanis recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a settled customer complaint on October 20, 2020.
Claimant (a) invested approximately $1,000,000 with registered representative between 2006 and 2008, (b) believed that she was investing in real estate, (c) received approximately $564,000 in distributions, and (d) alleges that her funds were misappropriated by the registered representative for his personal use.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $5,000.00 on October 06, 2020.
Customer alleges that beginning in 2000 the broker solicited an investment in a builder on Long Island and that customer invested additional funds in subsequent years. The customer received monthly payments until 2018 when the customer learned that the broker had misappropriated the customer’s funds. Customer alleges the Firm failed to adequately supervise the broker.
FINRA BrokerCheck shows a final customer complaint on August 21, 2020.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (‘Exchange Act’) against Steven Pagartanis (‘Respondent’ or ‘Pagartanis’). The Commission finds that on January 9, 2020, Pagartanis pled guilty to one count of conspiracy to commit mail and wire fraud in violation of Title 18 United States Code, Sections 1341, 1343, and 1349 before the United States District Court for the Eastern District of New York, in United States v. Steven Pagartanis, Crim. No. 18-cr-374 (E.D.N.Y.). On January 14, 2020, a judgment in the criminal case was entered against Pagartanis. He was sentenced to a prison term of 170 months followed by 3 years of supervised release and ordered to make restitution in the amount of $6,519,594. The count of the criminal indictment to which Pagartanis pled guilty alleged, inter alia, that, between January 2000 and March 2018, Pagartanis knowingly and intentionally conspired to devise a scheme and artifice to defraud at least 17 individuals who collectively invested more than $13 million with him, and that he caused commercial interstate carriers to deliver investors’ deposits to him. In view of the allegations made by the Division of Enforcement, the Commission deems it necessary and appropriate in the public interest that public administrative proceedings be instituted to determine whether the allegations set forth hereof are true and, in connection therewith, to afford Respondent an opportunity to establish any defenses to such allegations; and what, if any, remedial action is appropriate in the public interest against Respondent pursuant to Section 15(b) of the Exchange Act.
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 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.
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. Reg BI was meant to enhance the duties that registered representatives have to their clients by applying fiduciary principles to transactions and investment strategies by prohibiting brokers from placing their own financial interests ahead of the best interests of their client – the investor. 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.
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 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. 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.
Pagartanis has been in the securities industry for more than 28 years. Pagartanis has been registered as a Broker with Lombard Securities Incorporated since 2017.
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.