Securities Lawyers Blog
The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Michael Stanton (Stanton), currently employed by Worden Capital Management LLC (Worden Capital) has been subject to at least four customer complaints, two regulatory complaints, and nine financial disclosures and or tax and civil liens. According to records kept by The Financial Industry Regulatory Authority (FINRA), Stanton’s customer complaints allege that Stanton recommended unsuitable securities and engaged in excessive trading and churning among other allegations of misconduct in the handling of customer accounts.
In November 2016 Stanton was named a respondent in a FINRA complaint alleging that he and his member firm failed to establish, maintain, and enforce a reasonable supervisory system to prevent a registered representative from churning and excessively trading a customer’s brokerage accounts. FINRA alleged that Stanton and the firm failed to adequately investigate red flags demonstrating that the registered representative was churning the customer’s accounts. FINRA found that Stanton and the firm also failed to adequately investigate that the registered representative engaged in aggressive, “in-and-out” trading for no apparent reason – the hallmark of excessive trading and churning. Stanton was suspended for seven months and fined $5,000 as a result.
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.
Stantan entered the securities industry in 1986. From February 2013 through December 2016 Stanton was registered with Legend Securities, Inc – a firm that has since been expelled from the securities industry. Since December 2016 Stanton has been registered with Worden Capital out of the firm’s New York, New York 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.