Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Richard Rockwell (Rockwell), previously associated with H. Beck, Inc., has at least one disclosable event. These events include one tax lien, alleging that Rockwell recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 04, 2024.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (‘Exchange Act’) and Section 203(f) of the Investment Advisers Act of 1940 (‘Advisers Act’) against Richard Dow Rockwell (‘Rockwell’ or ‘Respondent’). Respondent has submitted an Offer of Settlement (the ‘Offer’) which the Commission has determined to accept. The Commission finds that on November 25, 2024, a final judgment was entered by consent against Rockwell, permanently enjoining him from future violations of Sections 206(1), 206(2) and 207 of the Advisers Act, Sections 5(a) and 5(c) of the Securities Act of 1933 (‘Securities Act’), and Section 15(a)(1) of the Exchange Act, in the civil action entitled Securities and Exchange Commission v. Dow Rockwell, LLC, et al., Civil Action Number 22-cv-02069, in the United States District Court for the Northern District of California. The Commission’s complaint alleged that, in connection with the sale of securities issued by Professional Financial Investors, Inc. (‘PFI’), Rockwell made false and misleading statements to his clients about his receipt of transaction-based compensation and failed to disclose to his clients material facts regarding the prior criminal conviction of PFI’s founder, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors. The complaint also alleged that, at the time Rockwell sold PFI securities to his clients, Rockwell was not associated with a registered broker-dealer. The complaint further alleged that Rockwell sold unregistered securities.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Data on the investor and the expense of the advice are consistently part of material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, a brokerage firm should not depend solely on information from the issuer regarding a company, but must perform its own thorough investigation.
Additional investor safeguards include broker disclosure requirements. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters. FINRA has recognized that recent research shows past regulatory and customer complaint issues can indicate future problems for brokers. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Rockwell has been in the securities industry for more than 14 years. Rockwell has been registered as a Broker with H. Beck, Inc. since 2006.
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.