Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Gregory Stein (Stein), currently associated with MML Investors Services, LLC, has at least one disclosable event. These events include one customer complaint, alleging that Stein recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a settled customer complaint on April 17, 2023.
The complainant alleges that beginning in 2022, quarterly tax estimates weren’t made related to a distribution, and stock was sold from his account without his authorization, which has put him in a higher tax bracket and has caused him financial harm.
Financial Advisors providing advice to retail investors are required to adhere to the SEC’s Regulation Best Interest (Reg BI). Reg BI applies a ‘best interest’ standard for broker-dealers and their associated people. 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 a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or 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. The SEC has stated that Reg BI is drawn from fiduciary principles that are common to both brokers and investment advisors including an obligation to act in the investor’s best interest and prohibiting an advisor from placing their own interests ahead of the investor’s. Reg BI comes with different core obligations that brokers must comply with. There is the duty of care obligation requiring financial advisors to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest among other duties. In order to do that the broker must evaluate the potential risks, rewards, and costs associated with a product, account type, or series of transactions being recommended.
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. The associated person must then apply both their reasonable diligence into various investment options as well as the information gathered as to the investor’s specific needs when considering the investment recommendation. The broker must explore various alternative investment options available to address these needs and determine that there is a reasonable basis to believe that the recommendation or service being recommended 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.
Stein entered the securities industry in 1984. Stein has been registered as a Broker with MML Investors Services, LLC since 2017.
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.