Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Benjamin Schick (Schick), currently associated with Cobalt Capital, INC., has at least one disclosable event. These events include one customer complaint, alleging that Schick recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $900,000.00 on March 22, 2025.
Based on Respondent records, the Claimants’ investment in iCap investments through the Respondent totaled $210,000, making three purchases between December 2019 and January 2021-the last of which occurred more than four years prior to the filing of the Statement of Claim. However, Claimant claimed that from 2019 to 2022, Respondents recommended private iCap investment products totaling approximately $900,000. Claimant, nearing 70 years of age, claimed that she had made it clear at that time that she wanted a portion of her assets to be invested in safe, income-producing investments. Instead, Respondents allegedly recommended unsuitable, high-risk, alternative investments in complex securities products and in the process, ignored the concentration issues, misrepresented the material risks, and ignored the Claimant’s instructions.\, Claimant asserts that the iCap investments were presented with optimistic and baseless performance projections, while proper due diligence would have revealed significant losses, negative cash flows, and other issues. Respondents allegedly failed to disclose these risks or the concentration dangers of recommending multiple investments. By Fall 2023, material risks-such as lawsuits, halted payments to shareholders, payroll tax issues, and the resignation of the CEO-became public knowledge.\, Rather than disclosing these risks, Respondents allegedly assured Claimant that they had conducted due diligence and that iCap was a reliable investment. Claimant believes Respondents were negligent, breached fiduciary duties, and violated Regulation Best Interest (Rule 15l-1(a)) by recommending unsuitable non-traditional investments.\, Respondents are accused of failing to exercise the required care, skill, and diligence in understanding the risks and costs of these investments or comparing them to safer alternatives better suited to Claimant’s needs. They also allegedly failed in their ongoing responsibilities to monitor and assist Claimant and instead persuaded her to invest further in these high-risk products without proper disclosures or due diligence.
Brokers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) standard of care under the Securities Exchange Act of 1934 which establishes a ‘best interest’ standard for broker-dealers and associated persons. This Reg BI standard of care applies to registered representatives making recommendations to customers in the purchase, sale, or exchange of securities or the implementation of investment strategies involving securities and non-securities. The rule also applies to the handling of opening accounts such as account transfers and types of accounts being recommended to be opened. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. Finally, the financial advisor must use their knowledge of both their reasonable diligence into investment options as well as their knowledge of the investor’s client specific needs to consider reasonably available investment options. Those investment options must allow the broker to determine that there is a reasonable basis that the recommendation is in the retail 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.
Schick entered the securities industry in 2005. Schick has been registered as a Broker with Cobalt Capital, INC. since 2005.
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.