Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Jake Fruge (Fruge), previously associated with PFS Investments INC., has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Fruge recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint on October 16, 2025.
Plaintiffs allege they purchased e-commerce stores and digital real estate from Champion E-Com, which was operated by Ian Prukner, Jake Fruge, Mellon Weaver and another individual. Plaintiffs allege, among other things, that he e-commerce stores and digital real estate were unregistered securities. Plaintiffs were not customers of PFS Investments and the compliant indicates that they made their purchases after Prukner, Fruge and Weaver were no longer associated with PFS Investments.
FINRA BrokerCheck shows a final customer complaint on November 28, 2023.
Without admitting or denying the findings, Fruge consented to the sanctions and to the entry of findings that he engaged in an OBA as an owner and co-CEO of a company that engaged in e-commerce and lead generation without providing prior written notice to his member firm. The findings stated that the OBA’s customers-including certain firm customers and firm registered representatives-each paid an up-front fee of at least $40,000 per e-commerce storefront and $4,000 per digital real estate website. The OBA’s customers then received a percentage of any income those storefronts and websites generated. Fruge did not disclose any component of the OBA to the firm until the after it was founded, when he orally disclosed only the e-commerce storefront component of the company. The firm approved this component of Fruge’s OBA several months later, by which time customers had already paid substantial fees to the OBA. The next year, the digital real estate component of the OBA was reported to the firm. By this time, customers had already purchased over 900 digital real estate websites, and Fruge had earned a significant amount from his involvement with the OBA. Following its approval of the e-commerce storefront component of Fruge’s OBA, the firm learned that the OBA had been marketed to other firm registered representatives, potentially creating a conflict of interest with Fruge’s firm business. The firm warned Fruge to stop this conduct and requested further information about the company, including the names of any firm customers or registered representatives who had purchased e-commerce storefronts. Fruge did not provide the requested information. Fruge’s failure to provide complete and prior written OBA disclosures to the firm-including his late disclosure of the e-commerce storefront component, the late disclosure of the digital real estate website component, and his failure to provide the list of firm representatives and customers who were also OBA customers-undermined the firm’s ability to evaluate the OBA and determine whether to restrict or prohibit Fruge’s participation in it. Later, the firm directed Fruge to stop engaging in any marketing activities for the e-commerce storefront component, which was the only component of the OBA Fruge had disclosed to it. Nonetheless, Fruge continued to market products of the company. Subsequently, the firm made Fruge choose between his OBA and working for it and he chose to continue with his OBA after winding down his firm business.
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. 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 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. The SEC has stated that Reg BI is drawn from fiduciary principles that are common to both brokers and investment advisors including an obligation to act in the investor’s best interest and prohibiting an advisor from placing their own interests ahead of the investor’s. 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.
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. 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. 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.
Fruge has been in the securities industry for more than 7 years. Fruge has been registered as a Broker with PFS Investments INC. since 2014.
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.