Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Devon Freeman (Freeman), previously associated with Northwestern Mutual Investment Services, LLC, has at least one disclosable event. These events include one tax lien, alleging that Freeman recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 28, 2025.
Without admitting or denying the findings, Freeman consented to the sanctions and to the entry of findings that he forged and backdated variable insurance applications and other documents. The findings stated that Freeman forged one customer’s signature on a document cancelling a life insurance policy and forged an additional customer’s signature nine times on a life insurance application. In addition, Freeman forged a third customer’s signature on three documents relating to variable insurance policies. Furthermore, Freeman forged a fourth customer’s signature eight times on a variable insurance application. Freeman also backdated this document to create the misimpression that the customer had applied for the insurance policy at a time when they were at an age that qualified them to obtain the policy at a lower cost. None of the customers authorized him to sign the documents on their behalf or were aware that he had engaged in these forgeries or the above-referenced backdating. After the firm informed the customers of Freeman’s conduct, three of the customers decided to remain invested in their fixed and variable life insurance policies and one customer declined to remain invested and received a refund of her premiums. Through this conduct, Freeman caused his member firm to maintain inaccurate records. The findings also stated that Freeman exchanged text messages with customers about securities business using his personal cell phone, which was an unapproved channel. Freeman did so without his firm’s knowledge or permission, and he did not send a copy of these communications to Northwestern. As a result, Freeman caused his firm to maintain incomplete records.
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.
In addition to specific investments being recommended, under Reg BI, a broker must also understand the type of account that their client would need in order to meet their care obligations. The SEC has stated that the type of securities account an investor has can greatly affect a customers’ costs and overall investment returns. Further, different account types can offer and support different features, products, securities, or services, and account type would not be appropriately applied in a one size fits all manner.
Freeman has been in the securities industry for more than 7 years. Freeman has been registered as a Broker with Northwestern Mutual Investment Services, LLC since 2015.
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.