Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker John Swon (Swon), previously associated with Royal Alliance Associates, INC., has at least 3 disclosable events. These events include one customer complaint, 2 regulatory events, alleging that Swon recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 30, 2023.
Swon used fraudulent and dishonest practices and demonstrated untrustworthiness by (a) fabricating twelve investment account statements, and (b) misappropriating more than $100,000 from a nonprofit organization.
FINRA BrokerCheck shows a final customer complaint on July 06, 2021.
Without admitting or denying the findings, Swon consented to the sanction and to the entry of findings that he refused to produce information and documents requested by FINRA in connection with its investigation concerning allegations in a customer complaint that he misappropriated funds. The findings stated that this matter originated from a Uniform Termination Notice for Securities Industry Registration (Form U5) that Swon’s member firm filed noting that he violated its policies regarding disclosure and approval of outside business activities (OBAs).
FINRA BrokerCheck shows a settled customer complaint with a damage request of $110,000.00 on April 01, 2021.
CLIENT ALLEGES THAT THE REPRESENTATIVE “MISAPPROPRIATED OR OTHERWISE MISMANAGED FUNDS ENTRUSTED TO HIM” AS AN INVESTMENT ADVISOR REPRESENTATIVE OF AN INDEPENDENT INVESTMENT ADVISORY FIRM.
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 standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types 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. 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. 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.
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. Finally, the advisor must use their knowledge of the first two elements to consider reasonably available investment option alternatives and come to the conclusion that there is a reasonable basis to believe that the recommendation or advice being provided 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.
Swon has been in the securities industry for more than 11 years. Swon has been registered as a Broker with Royal Alliance Associates, INC. since 2012.
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.