Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Neil Berlant (Berlant), previously associated with D.a. Davidson & CO., has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Berlant recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on April 05, 2022.
Without admitting or denying the findings, Berlant consented to the sanctions and to the entry of findings that he exercised discretionary trading authority in customer accounts without written authorization. The findings stated that Berlant obtained verbal permission from the customers to exercise discretion in their accounts and executed securities transactions in reliance on their grant of discretionary authority. However, none of the customers provided Berlant with prior written authorization for his use of discretion, and his member firm did not approve the accounts as discretionary. In addition, Berlant also falsely stated on falsely stated on three of his firm\\u2019s annual compliance questionnaires that he did not exercise discretion in customer accounts. The findings also stated that Berlant caused the firm to make and preserve inaccurate and incomplete books and records. Berlant used his personal e-mail address to communicate with firm customers about securities transactions in their firm accounts. Berlant did not disclose his use of his personal e-mail to the firm, or provide the firm with copies of his electronic correspondence with the customers. Berlant also falsely stated on three of the firm\\u2019s annual compliance questionnaires that he did not use a personal e-mail address for business-related communications, and deleted all records from his personal e-mail account during the course of the firm\\u2019s investigation. In addition, Berlant concealed his use of discretionary trading authority by improperly marking order tickets as unsolicited.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $5,684.19 on May 08, 2020.
Client inquired about an investment in writing and it was later confirmed verbally with the client that the FA had not discussed the investment with the client or received authorization to purchase. Allegation Activity Dates 7/26/19 – 5/8/20
In the financial industry advisors must meet the requirements of the SEC’s Regulation Best Interest (Reg BI) in providing investment advice and services. Reg BI established 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.
Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonably understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. 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 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.
Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonably understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. Finally, the financial advisor must use their knowledge of both their reasonable diligence into investment options as well as their knowledge of the investor’s client specific needs to consider reasonably available investment options. Those investment options must allow the broker to determine that there is a reasonable basis that the recommendation 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.
Berlant has been in the securities industry for more than 45 years. Berlant has been registered as a Broker with D.a. Davidson & CO. since 2013.
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.