Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker William Johnson (Johnson), previously associated with Cadaret, Grant & Co., INC., has at least 6 disclosable events. These events include 6 customer complaints, alleging that Johnson recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $489,898.00 on April 03, 2023.
Claimant alleges that representative recommended alternative investments that were risky, unsuitable, and illiquid. Claimant further alleges that representative made materially false and misleading statements related to claimant’s assets.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $499,999.00 on April 03, 2023.
Claimant alleges that representative recommended alternative investments that were risky, unsuitable, and illiquid. Claimant further alleges that representative made materially false and misleading statements related to claimant’s assets.
FINRA BrokerCheck shows a settled customer complaint on February 21, 2023.
Claimant alleges that firm representative misrepresented an investment in a Real Estate Investment Trust (REIT) as riskless and a source of guaranteed income. Claimant further alleges that firm representative falsely stated that the REIT was expected to become publicly traded.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $100,000.00 on February 21, 2023.
Claimants allege that representative misrepresented high-risk, high-commission, speculative alternative investments that were unsuitable for their retirement accounts.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $569,291.00 on January 19, 2023.
Claimant(s) allege that representative recommended investments that were largely concentrated in illiquid, speculative, low-quality, and high commission non-traded real estate investment trusts and Business Development Companies.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $200,000.00 on September 13, 2022.
Claimant alleges that, between 2015 and 2017, representative sold claimant various high risk investment products and misrepresented them as low risk, safe and suitable investments.
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. Reg BI applies when brokers recommend a retail investor engage in securities transaction or an investment strategy involving one or more securities. Reg BI also applies to financial advice concerning the transfer of funds and opening of accounts. 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.
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 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. 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.
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.
Johnson has been in the securities industry for more than 23 years. Johnson has been registered as a Broker with Cadaret, Grant & Co., 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.