Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Jason Goodhue (Goodhue), currently associated with Capitol Securities Management, Inc., has at least one disclosable event. These events include one tax lien, alleging that Goodhue recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint on December 18, 2024.
On December 18, 2024, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (No. CF-24-8398-S) against Jason A. Goodhue, a Connecticut registered broker-dealer agent. \<char_lb_r>\, The action alleged that, while employed by his previous broker-dealer, Buell Securities Inc., Goohue effected securities transactions electronically with a purported client of the firm without speaking with the client directly. Approximately $73,000 in client funds were affected. THe action also alleged that Goodhue exercised discretionary trading authority in the client’s account without the client’s authorization. Ultimately, following the client’s discovery of the of $73,000 missing from his account, it was ascertained that the electronic communciations were fraudulent and sent from the client’s e-mail account. Some of the client’s transferred funds were recovered, and Buell Securities Inc. replaced the balance of the transferred funds. The affected client did not suffer any losses as a result. Goodhue was charged the difference between the sale price of the shares that were sold and the higher cost of replacing the shares. The action alleged that Goodhue violated Sectuib 36b-4(b) of the Connecticut Uniform Securities Acty by engaging in dishonest or unethical practices and that he violated Section 36b-31-15b(a)(8) of the Regulations under the Act by exercising discreionary power in effecting transactions for a customer’s account without obtaining written discretionary authority.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Material information always includes information concerning the investor as well as the cost of the recommendation. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, a brokerage firm should not depend solely on the issuer for data about a company instead of performing its own thorough review.
Additional investor safeguards include broker disclosure requirements. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters. FINRA has recognized that recent research shows brokers with a past record of regulatory or customer complaint issues are more likely to have such problems again in the future. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Goodhue entered the securities industry in 2006. Goodhue has been registered as a Broker with Capitol Securities Management, Inc. 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.