The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Darrach Bourke (Bourke), currently employed by Emerson Equity, LLC (Emerson Equity) has been subject to at least six customer complaints, five criminal disclosures, one employment termination for cause, and one regulatory matter during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Bourke’s customer complaints alleges that Bourke recommended unsuitable investments in various investments including allegations of concentrations in energy securities among other allegations of misconduct relating to the handling of their accounts such as unauthorized trading.
In March 2017 FINRA sanctioned Bourke finding that Bourke consented to sanctions and findings that he exercised discretion without written authorization in the accounts of two customers. FINRA found that Bourke discussed investment strategies with these customers and then Bourke exercised discretion and executed transactions in the accounts without first speaking with the customers about the specific transactions. FINRA found that Bourke had not obtained prior written authorization from the customers to exercise discretion in their accounts, and his member firm had not approved either account for discretionary trading. FINRA fined Bourke $5,000 and suspended him for 20 business days.
Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.
In June 2018 a customer complained that Bourke violated the securities laws by alleging that Bourke, beginning in March 2015 exercised unauthorized discretionary control. The claim alleges $173,000 in damages and settled for $32,500.
Brokers are required under the securities laws to treat their clients fairly. This obligation includes the duties to disclose material risks of the investments they recommend and to present products, particularly complex or confusing products, in a fair and balanced manner that allows the client to evaluate the recommendation. Another important obligation advisors have is 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. Advisors should not present these investment options to clients. There are two screens that advisors 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 advisor 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.
According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases. In addition, research has show a disturbing pattern with troublesome brokers where brokers with high numbers of customer complaints are not kicked out of the industry but instead these brokers are sifted to lower quality brokerage firms with loose hiring practices and higher rates of customer complaints. These lower quality firms may average brokers with five times as many complaints as the industry average.
Bourke entered the securities industry in 2007. From November 2014 through May 2016 Bourke was registered with Summit Brokerage Services, Inc. Since May 2016 Bourke has been associated with Emerson Equity out of the firm’s Mill Valley, California office location.
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.