Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Chad Mackland (Mackland), previously associated with Lion Street Financial, LLC, has at least 4 disclosable events. These events include one customer complaint, 3 regulatory events, alleging that Mackland recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on September 30, 2021.
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’) and Section 203(f) of the Investment Advisers Act of 1940 (‘Advisers Act’) against Chad Thomas Mackland (‘Mackland’ or ‘Respondent’).\<char_lb_r>\, \<char_lb_r>\, The Commission finds that during most of the period from April 2017 to February 2020, Mackland was associated with various broker-dealers (as a registered representative) and investment advisers (as an investment adviser representative) that were registered with the Commission.\<char_lb_r>\, \<char_lb_r>\, On July 9, 2021, the Iowa Insurance Commissioner entered a final order against Mackland (the ‘Iowa Order’) that barred Mackland from applying for registration in Iowa as an investment adviser, investment adviser representative or as a securities agent; permanently revoked his Iowa resident insurance producer license; and permanently prohibited him from engaging in the insurance business in Iowa. \<char_lb_r>\, \<char_lb_r>\, According to the Iowa Order, the County Attorney’s Office in Pottawattamie, Iowa, charged Mackland with multiple felonies related to insurance sales practices. Mackland entered an Alford/guilty plea to the charge of Ongoing Criminal Conduct, which involved fraudulent sales practices and/or theft by deception on a continuing basis during the period August 2017 through August 2020. Following his guilty plea, Mackland was sentenced to a deferred judgment.
FINRA BrokerCheck shows a final customer complaint on July 09, 2021.
On August 24, 2020, the Pottawattamie County Attorney’s Office filed a Trial Information in criminal case number FECR163322 in the Iowa District Court for Pottawattamie County, charging Respondent with one count of Ongoing Criminal Conduct by committing fraudulent sales practices and/or theft by deception on a continuing basis. The criminal charges in Pottawattamie County stemmed from acts committed by Mackland acting in his capacity as a licensed insurance producer in the state of Iowa and relating to at least seven Iowa consumer households. Mackland was alleged to have fraudulently\<char_lb_r>\, converted life policies, increased policy coverage without consent, initiated or directed others to initiate policy loans without the insured’s consent, initiated or directed others to initiate premium draft changes without the insured’s consent, misrepresented the purpose of various insurance forms, and misrepresented to multiple insured’s that money would be deposited into a special holding account when in fact no such account existed and the money was used as premium payments for life policies.\<char_lb_r>\, \<char_lb_r>\, On April 5, 2021, Mackland entered an Alford plea to the charge of Ongoing Criminal Conduct in violation of Iowa Code \\u00a7 706A.2(4) and the State agreed to dismiss Counts II-IX of the Trial Information. In his plea, Mackland agreed that the Minutes of Testimony were substantially true and could be relied upon by the Court as a factual basis for his plea. On April 12, 2021, Mackland was sentenced to a deferred judgment. Mackland was ordered to complete 120 hours of community service, and ordered to pay $30,000.00 in Victim Pecuniary Damages. Mackland was also placed on probation for three years.\<char_lb_r>\, \<char_lb_r>\, Mackland did not report his criminal prosecution to the Commissioner within 30 days of the pretrial conference and has not done so as of the date of this filing.\<char_lb_r>\, \<char_lb_r>\, Mackland failed to notify the Division of his criminal sentencing within 30 days and has not done so as of the date of this filing.
FINRA BrokerCheck shows a final customer complaint on March 23, 2021.
Without admitting or denying the findings, Mackland consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA in connection with its investigation of an amended Form U5 filed for Mackland, that disclosed that criminal felony charges were pending against him for, among other things, theft and fraudulent sales practices.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $2,871,000.00 on April 15, 2020.
The complaint alleges that beginning in or around 2011 (which was before the rep joined the Firm), and continuing while the rep was with the Firm, the rep churned the complainant’s accounts, recommended unsuitable transactions, made fraudulent representations, communications and transactions, and breached fiduciary duties.
When your financial advisor is providing advice they must adhere to the SEC’s Regulation Best Interest (Reg BI) rule and standard of care. Reg BI replaced the former “suitability” rule and created a ‘best interest’ standard for brokerage firms and registered representatives. 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 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.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. 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. There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which require brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations include 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.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. 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. 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.
Mackland has been in the securities industry for more than 13 years. Mackland has been registered as a Broker with Lion Street Financial, 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.