Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Felipe Henao Vargas (Henao Vargas), previously associated with Insigneo Securities, LLC, has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Henao Vargas recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 19, 2023.
Without admitting or denying the findings, Henao consented to the sanctions and to the entry of findings that he exercised discretion without written authorization in a customer’s account. The findings stated that Henao exercised discretion in a customer’s account by initiating a substantial short position in a volatile exchange-traded note. After the trade went against his customer, Henao closed out the position. Henao did not have written authorization from the customer, or permission from his member firm, to exercise discretion in the account. Henao aggravated his misconduct by using an unapproved communication channel to exchange messages concerning the trades with a family member of the customer after the fact.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $1,300,000.00 on September 08, 2020.
On February 28, 2020, , A registered representative of the Firm, Felipe Henao(“Henao”) placed a short trade for 20,000 (BARCLAYS BK VIX SHORT TERM FUTURES ETN )(“Barclays”) for The account of Zaphiro Invesments (“Zaphiro” ) and on March 17th he placed a subsequent trade to cover the short.\<char_lb_r>\, On August 19th , 2020 the Firm was notified by Henao that his client ,Zaphiro had sent an email stating some concerns regarding the management and overall performance of his brokerage account. He stated that he was underwhelmed by the fluctuations and volatility in his account which had resulted in a substantial account value depreciation and by the lack of communication from Mr. Henao. The Firm has reviewed the complaint and has responded to the client and his attorney on September 2nd 2020 . The Firm received an arbitration claim for this complaint on September 8th , 2020.
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. 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. 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.
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. 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 different sub-parts of the Reg BI rule that financial professionals must comply with when providing advice. Among those is the duty of care obligation that mandates associated persons to evaluate investment options, review and be knowledgeable the risks and rewards of the investment or service, compare alternative investment products, and ensure that the overall investment strategy aligns with the client’s goals and is in their best interests.
Next, the broker must understand the investor’s investment background and profile. A customer’s profile includes information that describes the investor’s financial situation and needs. Information here will include their outside securities accounts and investments; relevant assets and debts; tax bracket; age; liquidity needs; risk tolerance; investment time horizon; experience with investing; investment objectives; and any other relevant information that the investor may choose to disclose pertinent to their situation. 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.
Henao Vargas has been in the securities industry for more than 14 years. Henao Vargas has been registered as a Broker with Insigneo Securities, LLC since 2016.
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.