Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Matthew Platnico (Platnico), previously associated with Allied Millennial Partners, LLC, has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Platnico recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $361,000.00 on July 09, 2024.
April 2019 to June 2020, Unsuitable trading
FINRA BrokerCheck shows a final customer complaint on May 23, 2023.
Without admitting or denying the findings, Platnico consented to the sanctions and to the entry of findings that he engaged in unauthorized and unsuitable trading in a customer’s account. The findings stated that Platnico recommended a high-risk options trading strategy in a joint account held by a customer and her late husband. Platnico communicated about that strategy regularly with the customer’s husband. Following the death of the customer’s husband, however, the customer and Platnico spoke by telephone once, and he continued to execute the trading strategy in the account. Platnico did not contact the customer before placing the options transactions at issue, nor did he have discretionary trading authority in the customer’s account. In addition, although Platnico occasionally called the customer’s son to discuss the options trading strategy employed in the customer’s account, he never obtained written trading authorization from the client for her son to direct the trading in the account. Moreover, Platnico did not conduct reasonable diligence to confirm that the options strategy continued to be suitable for the customer’s investment profile. In fact, it was not, given that the strategy involved a substantial risk of loss, the customer was retired, had limited investment knowledge and experience, and the customer had only a moderate risk tolerance. Platnico placed at least 100 unsuitable and unauthorized options trades in the customer’s account, which caused her to suffer substantial losses.
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 is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes 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 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. 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.
In addition to specific investments being recommended, under Reg BI, a broker must also understand the type of account that their client would need in order to meet their care obligations. The SEC has stated that the type of securities account an investor has can greatly affect a customers’ costs and overall investment returns. Further, different account types can offer and support different features, products, securities, or services, and account type would not be appropriately applied in a one size fits all manner.
Platnico has been in the securities industry for more than 32 years. Platnico has been registered as a Broker with Allied Millennial Partners, LLC since 2019.
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.