Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Armando Barron (Barron), previously associated with Irc Securities LLC, has at least one disclosable event. These events include one tax lien, alleging that Barron recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 08, 2025.
Without admitting or denying the findings, Barron consented to the sanctions and to the entry of findings that he failed to provide his member firm adequate prior written notice of his private securities transactions. The findings stated that Barron participated in private securities transactions by soliciting investors, who were not customers of his firm, to enter into promissory notes with an LLC he owned and controlled. Barron personally solicited each noteholder and signed each note on behalf of the LLC. All investors in the notes received timely interest payments, and the LLC has repaid all investors’ principal. Barron partially disclosed his promissory note activity to his firm by amending his previous OBA disclosure concerning the LLC. In that amendment, Barron provided a copy of the promissory note and wrote that the money from the promissory notes is invested in a specific investment fund managed by the LLC. That disclosure was incomplete and inaccurate because, in fact, Barron also used the money for purposes other than investing in that fund, including non-income generating purposes. Ultimately, Barron solicited a total of 14 investors to enter into 30 promissory note transactions totaling $979,500. The findings also stated that Barron solicited individuals to invest in the promissory notes through communications that failed to comply with FINRA’s content standards for communications with the public. Barron disseminated communications about the notes that did not provide a fair and balanced treatment of their risks and benefits and failed to provide a sound basis for evaluating the facts concerning the notes. In addition, Barron disseminated communications about the notes that contained unwarranted, promissory, or misleading statements concerning the notes and made comparisons in retail communications between investments without disclosing all material differences between those investments.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Every recommendation’s cost and investor details are always part of material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, a brokerage firm should not depend solely on the issuer for data about a company instead of performing its own thorough review.
To protect investors, it should be required to mandate broker disclosures. Brokers are required to report events to FINRA, such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters, as shown on their BrokerCheck reports. FINRA has recognized that recent research shows past regulatory and customer complaint issues can indicate future problems for brokers. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Barron has been in the securities industry for more than 16 years. Barron has been registered as a Broker with Irc Securities 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.