Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Alan Mason (Mason), currently associated with Bradley Woods & Co. Ltd., has at least 2 disclosable events. These events include 2 regulatory events, alleging that Mason recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on August 09, 2024.
In May 2024, without admitting or denying the findings, Mason entered into an Acceptance, Waiver and Consent (‘AWC’) with FINRA wherein Mason consented to the entry of findings that, in February 2020, he opened an individual account for a customer with a reported moderate risk tolerance, a liquid net worth between $200,001 and $500,000 and a stated investment objective of growth and income that did not include speculation. In February 2020 and July 2020, he recommended that the customer invest $50,000 each in GWG L Bonds, whose offering document stated that the bonds were speculative, involved a high degree of risk, were illiquid, and were only suitable for persons with substantial financial resources and no need for liquidity. The customer’s investment in the GWG L Bonds represented at least 20 percent of her liquid net worth. The AWC further found that Respondent’s recommendation that the customer invest an additional $50,000 in GWG L Bonds in July 2020 was not in her best interest based on her investment profile, including moderate risk tolerance, considering the high degree of risk associated with the GWG L Bonds. Mason agreed to a two-month suspension from associating with any FINRA member in all capacities, the payment of a fine in the amount of $5,000, and the disgorgement of $1,324.38 plus interest.
FINRA BrokerCheck shows a final customer complaint on May 22, 2024.
Without admitting or denying the findings, Mason consented to the sanctions and to the entry of findings that he willfully violated Rule 15/-1(a)(1) under the Securities Exchange Act of 1934 (Regulation Bl) by recommending that a retail customer invest at least 20 percent of her liquid net worth in a speculative, unrated debt security. The findings stated that the customer opened an individual account with Mason’s member firm through Mason. The customer reported a moderate risk tolerance with a liquid net worth between $200,001 and $500,000. The customer’s stated investment objective was growth and income, and it did not include speculation. Mason recommended that the customer invest $50,000 in bonds from a third offering of a publicly traded financial services company that focused on providing liquidity to holders of illiquid investments and alternative assets. Mason later recommended that the customer invest an additional $50,000 in a fourth offering of bonds by the company. As a result, Mason earned $1,324.38 in commissions in connection with his second recommendation. Mason’s recommendation that the customer invest an additional $50,000 in the bonds was not in her best interest based on her investment profile , including her moderate risk tolerance, in light of the high degree of risk associated with the bonds. The customer brought and settled an arbitration against the firm relating to her bond investments.
Brokers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) standard of care under the Securities Exchange Act of 1934 which establishes a ‘best interest’ standard for broker-dealers and associated persons. 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. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. 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. Finally, the financial advisor must use their knowledge of both their reasonable diligence into investment options as well as their knowledge of the investor’s client specific needs to consider reasonably available investment options. Those investment options must allow the broker to determine that there is a reasonable basis that the recommendation 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.
Mason entered the securities industry in 1984. Mason has been registered as a Broker with Bradley Woods & Co. Ltd. since 2023.
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.