Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Steven Susoeff (Susoeff), previously associated with LPL Financial Corporation, has at least one disclosable event. These events include one tax lien, alleging that Susoeff recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 30, 2024.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Steven J. Susoeff (‘Susoeff’ or ‘Respondent’). Respondent has submitted an Offer of Settlement (the ‘Offer’) which the Commission has determined to accept. The Commission finds that on December 23, 2024, a final judgment was entered by consent against Susoeff, permanently enjoining him from future violations of Sections 17(a) of the Securities Act of 1933 (‘Securities Act’), Section 10(b) of the Securities Exchange Act of 1934 (‘Exchange Act’) and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, as set forth in the judgment entered in the civil action entitled Securities and Exchange Commission v. Steven J. Susoeff, et al., Civil Action Number 2:23-cv-00173, in the United States District Court for the District of Nevada. The Commission’s complaint alleged that between January 2021 and July 2021, Susoeff and Steve Susoeff, LLC dba Meritage Financial Group (‘Meritage Financial’) engaged in a fraudulent cherry-picking scheme in breach of their fiduciary duties to their clients. The Commission’s complaint alleged that Susoeff used Meritage Financial’s omnibus trading account to disproportionately allocate a number of favorable trades (i.e., trades that had a positive first day return) to three accounts held by his friend, his girlfriend, and himself (the ‘Favored Accounts’), while disproportionately allocating a number of unfavorable trades (i.e., trades that had negative first day returns) to the accounts his other clients (the ‘Disfavored Accounts’). The Complaint alleged that as a result, for the time period at issue, the Favored Accounts enjoyed first day positive returns, while the Disfavored Accounts suffered negative first day returns.
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. Every recommendation’s cost and investor details are always 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, rather than depending solely on the issuer for company information, a brokerage firm should conduct its own reasonable investigation.
Additional, it should be required to mandate broker disclosures for investor’s protection. Brokers are required to report events to FINRA, such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters, as shown on their BrokerCheck reports. FINRA has recognized that recent research shows brokers with a past record of regulatory or customer complaint issues are more likely to have such problems again in the future. 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.
Susoeff has been in the securities industry for more than 10 years. Susoeff has been registered as a Broker with LPL Financial Corporation since 2002.
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.