Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Robert David (David), previously associated with Morgan Stanley, has at least 4 disclosable events. These events include 3 customer complaints, one regulatory event, alleging that David recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on April 07, 2022.
Without admitting or denying the findings, David consented to the sanctions and to the entry of findings that he falsified his customers\\u2019 account profile information. The findings stated that David falsely increased the net worth and liquid net worth of eight customers and changed the risk tolerance of one customer\\u2019s account in his member firm\\u2019s systems for maintaining account profile information for brokerage accounts. David did this in order to circumvent the firm\\u2019s solicitation restrictions and concentration limits for non-investment grade, fixed-income securities. By falsifying this information, David made the customers eligible for purchases of non-investment grade, fixed-income securities, for which they would have otherwise been ineligible under the firm\\u2019s procedures. As a result, David caused the firm to maintain inaccurate books and records. The findings also stated that David overconcentrated three customers in non-investment grade, fixed income securities. Specifically, David concentrated between approximately 32.72 and 71.18 percent of these customers\\u2019 liquid net worth in non-investment grade, fixed-income securities, which was inconsistent with the customers\\u2019 investment objectives and risk tolerances. These securities entailed a high degree of risk, including the risk of default, and subjected the customers to a substantial risk of loss. The findings also included that David exercised discretion in eight customers\\u2019 accounts without prior written authorization.
FINRA BrokerCheck shows a settled customer complaint on July 14, 2020.
CLIENT ALLEGED, INTER ALIA, FAILURE TO FOLLOW INSTRUCTIONS WITH RESPECT TO INVESTMENTS MADE IN HIS MANAGED ACCOUNT 2017-2019 DAMAGES UNSPECIFIED
FINRA BrokerCheck shows a settled customer complaint with a damage request of $183,000.00 on April 14, 2020.
Client alleged, inter alia, misrepresentation with respect to corporate bond investments – 9/24/2014 to 02/29/2020
FINRA BrokerCheck shows a settled customer complaint on March 14, 2020.
Client verbally alleged, inter alia, unsuitability with respect to investments. – April 2015- March 2019
In the financial industry advisors must meet the requirements of the SEC’s Regulation Best Interest (Reg BI) in providing investment advice and services. Reg BI established a ‘best interest’ standard for brokerage firms and registered representatives. 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. 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.
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. Reg BI was meant to enhance the duties that registered representatives have to their clients by applying fiduciary principles to transactions and investment strategies by prohibiting brokers from placing their own financial interests ahead of the best interests of their client – the investor. There are different sub-parts of the Reg BI rule that financial professionals must comply with when providing advice. Among those is the duty of care obligation that mandates associated persons to evaluate investment options, review and be knowledgeable the risks and rewards of the investment or service, compare alternative investment products, and ensure that the overall investment strategy aligns with the client’s goals and is in their best interests.
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. 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. Finally, an advisor must also analyze the specific account features offered and determine whether their client can benefit from them in order to meet their care obligations. While securities and investments come with costs that must be considered, the type of securities account also has changes the cost equation for the investor and can change the retail customers’ future investment returns. The associated person must consider the different types of securities accounts for their client and determine whether or not the cost or features are reasonably needed for the client or if the customer’s current account costs and features are superior to solutions available to the advisor. In any event, the type of account and services recommended must be in the investor’s best interest.
David has been in the securities industry for more than 12 years. David has been registered as a Broker with Morgan Stanley since 2009.
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.