Securities Lawyers Blog
The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that Broker Anthony D’angelo (D’angelo), currently employed by Fmsbonds, INC. has been subject to at least one disclosable event. These events include one customer complaint. According to records kept by The Financial Industry Regulatory Authority (FINRA), D’angelo’s most recent customer complaint alleges that D’angelo recommended unsuitable investments in structured products and makes allegations concerning misconduct relating to the handling of the customer’s accounts.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $25,000.00 on September 24, 2024.
In the wake of the pandemic, customer alleges that he wanted to sell his bond position during their technical default/bankruptcy when there was still a market for them mid 2022 . Now 2024 there is no market and the bonds have not been restructured. Alleges broker did not follow instructions, provided poor information and customer service.
Structured products belong to a category of derivative products, which obtain their performance from data linked to the market. A structured product typically relies on a reference source to assume market risk. It can originate from a single security, a group of securities such as a market index, commodities, interest rates, or a portfolio of real estate loans. The variety of products that can be structured demonstrates the difficulty in formulating a single unified definition of a structured product.
Compared to traditional debt or equity instruments, structured products generally yield inferior risk/return profiles, as the issuing brokerage firms—primarily large banks—profit from the spread between investor payouts and the earnings from issuing structured notes, after accounting for broker commissions and fees. Given the sophistication of these investments, most investors will be unable to fully understand their benefits or assess the chances of gains and losses. Many brokers misrepresent these investments to clients as fixed income or bond like investments with return of capital. The risk of loss in structured products is significantly higher than in corporate debt and other fixed-income options, making them an unsuitable fixed-income alternative.
Recently, firms have begun selling redeemable structured notes often linked to a single investment or a basket of investments. A few cases of structured products based on single securities reveal their excessive risk while lacking meaningful advantages. Our firm analyzed a structured note linked to the stock of Peloton that promised to investors 1.0625% interest monthly or 12.75% annually and another note linked to the stock of Zillow which promised a 12% annual interest payment paid monthly so long as the respective stock prices stayed above a referenced value. The interest payment remains intact unless both stocks experience a loss of about 40% of their value. In addition, if the stocks lost more than approximately 40% of their value then the investor would also lose their corresponding principal based upon the performance of the stocks and could lose their entire investment. Further, the notes were callable and could be cancelled by the sponsor.
These products are very high risk and low reward propositions because the investor can only profit at most by 12-12.75% over the course of one year. Even if Peloton or Zillow doubled in value all the investor could achieve would be the interest payment as their profit and none of the price appreciation. Meanwhile the maximum loss is 100% of the investment if the stocks fell severely. Accordingly, the investor takes dramatic downside risks associated with the volatile stocks while having no chance to participate in the success of the stock.
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.
D’angelo entered the securities industry in 2009. D’angelo has been registered as a Broker with Fmsbonds, INC. since 2009.
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.