Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Camille Cordova (Cordova), previously associated with Nylife Securities LLC, has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Cordova recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on May 31, 2022.
Without admitting or denying the findings, Cordova consented to the sanctions and to the entry of findings that she made unsuitable recommendations for a family trust formed by a senior married couple. The findings stated that Cordova and another registered representative at her member firm recommended that the trust purchase a deferred variable annuity for approximately $540,000 and fund that purchase through two withdrawals from an indexed annuity owned by the trust. Cordova was aware that funding the purchase of the variable annuity with withdrawals from the trust’s existing annuity could result in negative tax consequences for the trust and was also aware that the recommendation to purchase the variable annuity would not be suitable if it caused negative tax consequences for the trust. However, neither Cordova nor the other representative researched how the trust might be able to purchase the variable annuity without negative tax consequences. Instead, the other representative recommended that the trust withdraw funds from the indexed annuity via two checks payable to the trust and immediately endorse the checks as payable to the firm in order to fund the purchase of the variable annuity. The representative mistakenly believed that having the trust immediately endorse the checks as payable to the firm would avoid any adverse tax consequences, but he did not confirm that belief. Cordova knew of, and acquiesced to, the representative’s funding recommendation without doing any of her own additional research. The withdrawal of the funds from the indexed annuity were, in fact, taxable events that resulted in negative tax consequences to the trust. The adverse tax consequences could have been avoided if Cordova or the other representative had recommended the new variable annuity be purchased as a tax-free 1035 exchange, but they failed to research that option.
FINRA BrokerCheck shows a settled customer complaint on September 15, 2020.
Claimants allege that on or about June 6, 2018 and October 24, 2018 they were provided with an unsuitable\<char_lb_r>\, investment recommendation to roll over assets from an existing fixed income annuity maintained at another\<char_lb_r>\, firm into an Equitable variable annuity.
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. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types of accounts.
Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonably understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. 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. 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. 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.
Cordova has been in the securities industry for more than 4 years. Cordova has been registered as a Broker with Nylife Securities LLC since 2019.
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.