Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Scot Barringer (Barringer), previously associated with American Trust Investment Services, INC., has at least 3 disclosable events. These events include one customer complaint, 2 regulatory events, alleging that Barringer recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint on June 10, 2025.
Customer Alleges Breach of contract and warranties, promissory estoppel, violation of fraud and estate securities statutes and the deceptive trade practices act, intentional and negligent misrepresentations of material fact and statutes and the deceptive trade practices act, intentional and negligent misrepresentations of material fact and vicarious liability in conjunction with their purchase of GWG.
FINRA BrokerCheck shows a pending customer complaint on May 28, 2025.
Order To Show Cause and Order of Summary Suspension in connection with recent FINRA AWC2020068655903. \, From October 2020 through February 2021, Applicant recommended GWG L Bonds without having a reasonable basis in light of customers’ investment profiles for four customers.
FINRA BrokerCheck shows a final customer complaint on April 22, 2025.
Without admitting or denying the findings, Barringer consented to the sanctions and to the entry of findings that he recommended that customers invest in a speculative, unrated debt security without having a reasonable basis in light of the customers’ investment profiles. The findings stated that Barringer recommended the bonds without having a reasonable basis to believe that they were in the best interest of three customers, who were all retired individuals, or suitable for a customer, a non-profit entity that invested through a financial committee that was not subject to Rule 15l-1(a)(1) of the Securities Exchange Act of 1934 (Reg BI), in light of the customers’ investment profiles. As a result, the customers were overconcentrated in the bonds, either alone or in combination with other alternative investments. None of the customers had experience with alternative investments before investing in the bonds. Moreover, all of the customers had moderate to moderately aggressive risk tolerances, and investment objectives of income. By recommending the bonds without having a reasonable basis to believe they were in the best interest of customers, Barringer willfully violated Reg BI. The findings also stated that Barringer inaccurately completed transaction forms that he submitted in connection with eight customers’ purchases of the bonds, by incorrectly stating the percentage of the customers’ net worth that would be invested in these securities, thereby causing his member firm to maintain inaccurate books and records. Barringer underreported the customers’ net worth concentration percentages-in the bond investments, in alternative investments as a whole, or in both-by failing to include in his calculations the customers’ prior purchases of bonds or their existing holdings in other alternative investments. For five of the customers, Barringer also inaccurately stated that the recommended bond investments did not cause the customers to meet or surpass one or both of the concentration thresholds.
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. 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. 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. 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.
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.
Barringer has been in the securities industry for more than 39 years. Barringer has been registered as a Broker with American Trust Investment Services, INC. since 2020.
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.