Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Stephen Franko (Franko), currently associated with Independence Capital Co., INC., has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Franko recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $200,000.00 on May 14, 2026.
A customer claimed purchased $200,000 in GWG L-Bonds. The customer claims that Independence Capital allowed the transaction which the customer claims was unsuitable, despite his having served as Vice President of a credit union. Mr. Franko is not named as a respondent but the customer named him as his registered rep.
FINRA BrokerCheck shows a final customer complaint on November 17, 2025.
Without admitting or denying the findings, Franko and Scheiman consented to the sanctions and to the entry of findings they willfully violated Rule 15/-1(a)(1) under the Securities Exchange Act of 1934 (Reg BI) by recommending that customers invest in speculative and unrated corporate bonds that were not in the customers’ best interests. The findings stated that Franko made recommendations totaling $195,000 to three elderly retail customers with investment objectives of income and did not include speculation, all of whom made the recommended investment. Frank earned $5,640 in commission in connection to his recommendation and did not exercise reasonable diligence, care, and skill to, among other things, have a reasonable basis to believe that the recommendations were in their best interest based on their investment profiles and the potential risks, rewards, and costs associated with the recommendations. The findings also stated that Scheiman recommended and sold a $100,000 bond to an elderly retail customer with an investment objective of income and did not include speculation. Scheiman earned $2,600 in commission in connection with this recommendation and did not exercise reasonable diligence, care, and skill to, among other things, have a reasonable basis to believe that the recommendation was in the best interest of the customer based on the customers investment profile and the potential risks, rewards, and costs associated with the recommendation. After the customer complained to Scheiman’s firm, the firm returned the customer’s principal amount.
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 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. 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.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. The Reg BI rule applies a fiduciary principles and requires an associated person to act in the retail investor’s “best interests” while barring the broker from placing their own financial interests and compensation incentives ahead of the investor’s best interest. 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 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. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest. An advisor must understand the type of account, securities, and their client in order to meet their care obligations. The type of securities account has the potential to greatly affect retail customers’ costs and investment returns. Different types of securities accounts can offer different features, products, or services, and not all types of accounts or services would be in every investor’s best interest.
Franko entered the securities industry in 1991. Franko has been registered as a Broker with Independence Capital Co., INC. since 2000.
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.