Securities Lawyers Blog
Broker Sebastian Wyczawski, currently employed at Joseph Stone Capital, LLC., (Joseph Stone) has been subject to at least three customer complaints during the course of his career. His most recent customer complaints allege unsuitability and failure to supervise. According to a BrokerCheck report, in June 2018, Wyczawski was alleged of making unsuitable recommendations. This matter against him settled for $17,500. Additionally in December 2019, a customer complaint was filed against Wyczawski for his alleged failure to supervise. In his Broker Comment, Wyczawski states: “I am being named in this arbitration due to the fact that I was the OSJ branch owner.” The matter, for the requested amount of $235,000 is still pending. Moreover, in March 2004, Wyczawski was alleged to have engaged in unauthorized trading. This matter ultimately settled for $37,500.
Brokers have an obligation to make only suitable recommendations for investments to the client. There are many investments that are not appropriate for the majority of investors or for certain investors given their risk tolerance, age, and other factors. Brokers should not present these investment options to clients. There are two screens that brokers must employ to determine whether an investment is suitable for a client. First, there must be a reasonable basis for the recommendation – meaning that the product has been investigated and due diligence conducted into the investment’s features, benefits, risks, and other relevant factors. The broker must conclude that the investment is suitable for at least some investors and some securities may be suitable for no one. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short-term goals, age, disability, income needs, or any other relevant factor.
The duty to supervise is a critical component of the securities regulatory scheme. Regulatory authorities such as the SEC and FINRA have steadily heightened the supervisory obligations of brokerage firms in recent years. Supervisors have an obligation to respond vigorously to indications of irregularity, often times referred to as “red flags.” A supervisor cannot ignore or disregard red flags and must act decisively to detect and prevent improper activity.
In exercising a brokerage firm’s supervision duties, the firm must put in place and implement a supervisory procedure designed to reasonably ensure compliance with the suitability rule. Such a system often includes periodic reviews of a broker’s investment recommendations for potential red flags indicating potential misconduct. Brokerage firms should also ensure that an investor’s concentration in a particular security or type of security is reasonable in light of the investor investment objectives and risk tolerance.
Wyczawski entered the securities industry in 1998. From 1998 through 2001, Wyczawski was registered with Seaboard Securities, Inc. From 2001 through 2006, Wyczawski was registered with Milestone Financial Services Inc. From 2006 through 2010, Wyczawski was registered with Liberty Partners Financial Services, LLC. From 2010 through 2015, Wyczawski was registered with Cape Securities, Inc. Wyczawski has been registered at Joseph Stone Capital, LLC. from 2015 through the present day.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to suitability violations. Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.