Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Tarek Mohamed (Mohamed), previously associated with Bankers Life Securities, INC., has at least 3 disclosable events. These events include one customer complaint, 2 regulatory events, alleging that Mohamed recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 29, 2021.
Mohamed was named a respondent in a FINRA complaint alleging that he failed to provide information and documents requested by FINRA during its investigation into the circumstances of his termination from his member firm. The complaint alleges that the firm filed a Form U5 disclosing that it terminated Mohamed for violating standard of conduct rules and firm policies related to his failure to disclose, and solicitation of investments in, an outside business activity. The Form U5 also disclosed a complaint filed on behalf of Mohamed\\u2019s client, alleging that he took $46,000 in client funds and deposited them into an account in the name of Mohamed\\u2019s company. The funds were delivered by the client in the form of two personal checks written to the company. Later the firm filed an amendment to the Form U5 disclosing that a second complaint was filed on behalf of Mohamed\\u2019s same client, alleging that he did not act in the client\\u2019s best interest when he sold financial products to the client. Later, the firm disclosed that it had settled the complaints by refunding $46,000 to the client and granting other relief. In response to FINRA\\u2019s request, Mohamed provided FINRA with a partial response from his email account. In a written statement, Mohamed admitted that he deposited $46,000 in client funds into his business account but asserted that he returned the funds in cash to the 78-year-old client (less a commission) to help the client. Mohamed provided a single company bank statement that showed the first deposit of $31,000 and a subsequent $29,000 cash withdrawal. However, Mohamed did not provide any other information or bank statements for any personal or business bank accounts, brokerage statements, or any business or personal tax returns that had been requested by FINRA. Mohamed later emailed another partial response. Specifically, Mohamed provided a narrative response to some questions posed by FINRA but that response was incomplete because Mohamed still did not provide any other information or bank statements for any personal or business bank accounts, brokerage statements, or any business or personal tax returns. Mohamed emailed a third partial response providing responsive company bank statements. One company statement showed deposit of the client\\u2019s $15,000 check without a corresponding large cash withdrawal. Subsequently, FINRA sent Mohamed a notice informing him that he was suspended from associating with any FINRA member and warning him that he would be automatically barred if he did not request termination of the suspension on grounds of full compliance. To date, Mohamed has not fully complied with FINRA\\u2019s requests and as a result he is currently suspended from associating in any capacity with any FINRA member. \, \,
FINRA BrokerCheck shows a final customer complaint on May 21, 2021.
Respondent Mohamed failed to respond to FINRA request for information.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $75,982.00 on July 22, 2020.
In a written complaint, dated July 22, 2020, addressed to Bankers Life and Casualty Company (BLC), an insurance company affiliate of the Firm, a BLC client’s POA alleged that the client wrote his financial representative two personal checks (1st for $31,000 on 12/3/2019, 2nd for $15,000 on 6/23/2020) made out to a company called Perfect Media Promotions, Inc LLC, a company that was initially registered to the financial representative but has been inactive since 2017. Perfect Media Promotions, Inc. is not affiliated with BLC or the Firm. The complaint alleged that the client was not provided any documentation relating to this alleged investment. The complaint further alleged that the financial representative fraudulently took the $46,000 and requested return of this money. In light of the allegations, BLC informed local law enforcement of the complaint. BLC was subsequently notified that law enforcement did not intend to pursue criminal charges, based on its determination of no criminal activity within the jurisdiction. BLC denied the first complaint on August 19, 2020. The Firm conducted a review of the accounts and determined the complainant was not a client of the Firm, however the Firm is reporting this complaint due to client’s allegation of theft, misappropriation and conversion. Client’s POA filed a subsequent complaint on October 20, 2020 addressed to BLC asking for the client be able to surrender his equity-indexed annuities and LI Policy issued by BLC without penalty, alleging the former financial representative did not act in the client’s best interest. In the second complaint, the client’s POA reiterated the allegation that client did not receive the $46,000 at issue in his first complaint. BLC determined to settle this complaint with the client and refunded all BLC policies written by the financial representative without any surrender penalties and refunded the $46,000 that was at issue in the first complaint. In relation to the second complaint, while the equity indexed annuities sold to the client were not securities and were issued by BLC, the firm is reporting this complaint because the source of funding for three of the BLC annuities came from the sale of securities recommended by a financial representative of the Firm.
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. 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.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. The SEC has stated that Reg BI is drawn from fiduciary principles that are common to both brokers and investment advisors including an obligation to act in the investor’s best interest and prohibiting an advisor from placing their own interests ahead of the investor’s. Reg BI comes with different key obligations that associated persons must meet in dispensing advice. The care obligation requires registered representatives to carefully evaluate investment options, review the risks and rewards of the investment or service, compare similar products, and ensure that the recommended investment is appropriate for the customer and in the retail investor’s best interest.
Next, the broker must understand the investor’s investment background and profile. A customer’s profile includes information that describes the investor’s financial situation and needs. Information here will include their outside securities accounts and investments; relevant assets and debts; tax bracket; age; liquidity needs; risk tolerance; investment time horizon; experience with investing; investment objectives; and any other relevant information that the investor may choose to disclose pertinent to their situation. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest. Brokerage firms and advisors must also understand the features and limitations of various account types as part of meeting Reg BI’s care obligations. Firms typically offer a variety of account options and services with different trading costs, services, such as account and activity monitoring. An advisor’s recommendation as to what type of securities account to open can alter the customers’ overall costs and investment returns. The advisor must determine that the client can benefit from the type of account being recommended to be opened and in the investor’s best interest taking into account the costs, benefits, and needs of the client.
Mohamed has been in the securities industry for more than 2 years. Mohamed has been registered as a Broker with Bankers Life Securities, INC. since 2017.
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.