Mar 30, 2023

Broker C. Raymond Weldon Investigation & Customer Complaints

C. Raymond Weldon Of Independent Financial Group, LLC And Formerly With The Investment Center, Inc. and Cetera Advisor Networks LLC, Has Six Customer Complaints For Alleged Broker Misconduct. C. Raymond Weldon has been the subject of at least six (6) customer complaints that we know about to recover investment losses. The Law Offices of Robert Wayne Pearce, P.A. currently represent five of his customers in a FINRA arbitration claim against Weldon’s employers. IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with C. Raymond Weldon and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. Please contact us online via our contact form or by giving us a ring at (800) 732-2889. Raymond Weldon Customer Complaints Weldon has been the subject of at least six (6) customer complaints that we know about to recover investment losses. We currently represent five of his customers against Weldon’s employers. A summary of the allegations made in the FINRA arbitration filed for investment losses realized by five of Weldon’s clients were as follows: 1. Introduction Claimants filed an arbitration claim against Respondents Cetera Advisors Networks, LLC (“CAN”), The Investment center, Inc. (“TIC”), and (“IFG”) for their registered representative C. Raymond Weldon (“Weldon”) failure to act in Claimants’ “best interest,” and his unsuitable recommendations, misrepresentations, misleading statements, acts, and omissions. Weldon had written discretionary authority to manage Claimants’ accounts and failed to do so. Respondents CAN and TIC formerly employed and IFG who currently employs Weldon held him out and other employees on his team as stockbrokers, investment advisers, investment managers, financial advisers, and financial planners with special skills and expertise in the management of securities portfolios and financial, estate, retirement, and tax planning matters. Weldon was a Chartered Financial Consultant, a professional with a certification which would indicate Respondents and Weldon knew or should have known his mismanagement Claimants’ accounts was in breach of his fiduciary duties and below the acceptable standard of care of professionals like him.  2. THE RELEVANT FACTS All Claimants, except one Claimant’s wife, worked together. They were introduced to Weldon as an investment manager who successfully managed securities brokerage accounts for a local synagogue and many of its members. With one limited exception, none of the Claimants had any securities brokerage accounts or experience investing in the stock or bond markets before they met Weldon. They were all interested in saving for retirement and he solicited them to establish an investment advisory and brokerage relationship for that purpose. Claimants Richard, Anthony, Alex, Chris, and, later on, Jessica, opened small, unleveraged, and well diversified mutual fund investment accounts, which Weldon managed for a fee on an annualized basis (the “ProFunds Accounts”). The Cetera Advisor Networks, LLC (“CAN”) Accounts In or about October 2020, Weldon boasted about his performance in managing the ProFunds Accounts and introduced them to another type of customized stock brokerage account he managed for synagogue members. He encouraged Claimants to open additional accounts with him to invest in the stock market for their retirement (the “CAN Accounts”). Weldon met with Claimants and showed them documents related to his performance managing other clients’ accounts. He spoke with the other Claimants over the telephone about his performance record. He provided little detail about his management style other than he had a “track record” for substantially growing the assets deposited in his clients’ securities brokerage accounts and preserving assets for their retirement. Weldon claimed that his pro-active management style allowed him to maximize growth in the up markets and minimize losses in down markets. There was no discussion with them about the true nature, mechanics, or risks of the highly leveraged and overly concentrated investment strategy he deployed in the technology sector of the stock market.  The individual Claimants gathered assets from savings, bonuses, and/or refinanced real estate to open and deposit cash in their CAN Accounts. They each deposited substantial amount of money in each of their accounts in December of that year and the following year for Weldon to manage for their retirement. The Claimants’ employer was the last to open an account and deposit funds it had reserved for working capital in January 2021. Weldon prepared and all the Claimants signed management agreements and gave Weldon the authority to manage their accounts on margin without any prior consultation about the investments being made or strategy deployed and paid him a management fee to do so. Claimants did not realize Weldon’s papers also allowed Respondents to get paid commissions on each transaction in their accounts. Weldon also prepared and completed new account opening documents and agreements for managed accounts with false and/or misleading information to suit his strategy and his own “best interest,” as opposed to Claimants. For example, he wrote that one Claimant that was a construction company had over 20 years’ experience investing in stocks, bonds, and mutual funds when he knew it did not even exist until 2013 and never had any securities brokerage accounts. Further, Weldon knew that the company was depositing working capital which needed to be conservatively invested in non-volatile liquid investments and yet he falsely identified the company’s investment objective as “aggressive growth” and risk tolerance as “significant” meaning “an investor who seeks maximum return and accepts the risk of significant volatility and decreases in the value of a portfolio.” According to Weldon, the company had no need for liquidity, which was untrue. These were not clerical errors; rather, they were intentional mischaracterizations by Weldon to slip under the Compliance Department’s radar and manage the accounts in a speculative manner against Claimants’ instructions.  Weldon regularly encouraged Claimants to bring in more money for him to manage. Why? Because it was in his “best interest,” not the Claimants. The greater the total account market value, the greater the management fees which were based upon assets under management. The more money Claimants deposited, the more transactions and more commissions, Respondents and he received, in addition...

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Mar 30, 2023

Ex-Centaurus Financial Broker Joseph Michael Todd Sued

The Law Offices of Robert Wayne Pearce, P.A. is currently representing a Client of Joseph Michael Todd who has filed an arbitration claim against his employer, Centaurus Financial, Inc. Joseph Michael Todd Formerly With Centaurus Financial, Inc. and Investors Capital Corp. Has Three (3) Customer Complaints For Alleged Broker Misconduct. IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with Joseph Michael Todd and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. Please contact us online via our contact form or by giving us a ring at (800) 732-2889. Joseph Michael Todd Was Terminated by Centaurus Financial, Inc. On July 21, 2022, Joseph Michael Todd was terminated by Centaurus Financial, Inc. for not cooperating with an ongoing investigation into whether Joseph Michael Todd violated firm policy and industry rules with respect to allegations of selling away and the receipt of customer funds. Our law firm was contacted by a customer of Joseph Michael Todd alleging misappropriation or theft of funds. We are currently investigating such claims and are accepting clients who were victims of Joseph Michael Todd’s alleged misconduct. Joseph Michael Todd was fired from Centaurus Financial in July 2022, according to FINRA’s BrokerCheck. Michael Todd was terminated from Centaurus Financial because of claims he sold investments not authorized by the company, a common practice known as “selling away.” Did Joseph Michael Todd Cause You Investment Losses? Joseph Michael Todd, also known as Michael Todd, Formerly With Centaurus Financial, Inc. and Investors Capital Corp. Has Three (3) Customer Complaints For Alleged Broker Misconduct. If you believe you have suffered investment losses resulting from the conduct of Joseph Michael Todd at Centaurus Financial and Investors Capital Corp. you can contact the securities attorneys at The Law Offices of Robert Wayne Pearce, P.A. for a free consultation to discuss your rights. Joseph Michael Todd Customer Complaints Joseph Michael Todd has been the subject of three (3) customer complaints that we know about, one (1) of those complaints was filed in 2022 to recover investment losses. And One (1) of Joseph Michael Todd’s three (3) customer complaints were settled in favor of investors. However, one (1) of Joseph Michael Todd’s customer complaints was closed, and the customers have not taken any further action. There is currently one (1) pending customer complaint filed against Joseph Michael Todd’s former employer Centaurus Financial, Inc. for investment losses caused by alleged misconduct.  Allegations Against Joseph Michael Todd A sample of the allegations made in the FINRA reported arbitration claim settlements and/or pending complaints for investment losses are as follows:  We currently represent a Client of Joseph Michael Todd who have filed an arbitration claim against his employer, Centaurus Financial, Inc. A summary of the allegations made in the FINRA arbitration filed for investment losses realized by the Claimant were as follows: 1. Introduction Respondent Centaurus employed Joseph Michael Todd (hereafter referred to as either “Mike” or “Mr. Todd”) and held him out as registered representative, investment adviser, investment manager, financial adviser, and financial planner with special skills and expertise in the management of securities portfolios and financial, estate, retirement, and tax planning matters. Centaurus hired Mr. Todd after he was terminated by two prior broker-dealers for violations of industry rules, firm policies and procedures, including allegations of selling unapproved investments and misappropriation. It also permitted Mr. Todd to operate his Centaurus branch offices under the name “Todd Financial Services” as “a DBA for branding purposes.” The Respondent is being sued in its capacity as broker-dealer and investment adviser, investment portfolio manager, financial planner, and/or as an employer whose employees and agents, including, but not limited to, Mr. Todd, committed the acts and omissions which are the subject of this Statement of Claim.  Claimant is a 62-year-old single woman back working 3 months after she had retired and discovered that her Centaurus’ stockbroker and investment advisor Mr. Todd did the following: 1) Stole $425,000 of her funds that were supposed to have been invested in safe, liquid, fixed income securities for her retirement security and income; 2) Acted in his own “best interest” instead of Claimant’s “best interest” in soliciting her to sell $420,000 of her investment grade municipal bonds and reinvesting the sales proceeds in illiquid and high-risk alternative investments;  3) Purchased $255,000 of high-risk preferred stocks and real estate investment trusts in her account without consulting her or any written discretionary authority; and 4) Misrepresented Claimant’s investment portfolio holdings in customized reports prepared by him at his Centaurus office to cover up the theft of her funds.  Apparently, Claimant was not Mike’s only victim. On July 21, 2022, Mike’s employment with Centaurus was terminated for failing to cooperate with the broker-dealer’s investigation into allegations by others that he made unauthorized investments and/or absconded with their funds. Mr. Todd is under investigation by the Citrus County Sherriff’s Office and the United States Securities and Exchange Commission. He has surrendered what is left of his assets to an Assignee for Benefit of Creditors, the value of which is substantial less than the amount he owes to Claimant and other Centaurus clients. 2. The Relevant Facts The Claimant is a high school graduate with a 2-year associates degree. She has had many jobs over the years in various industries. The Claimant thought she had retired from her last job in April 2022. Unfortunately, she has had to go back to work for the same company after she discovered theft, fraud, and other misconduct, which is the subject of this arbitration proceeding. The Claimant first met Mike in Homosassa, Florida in 2000. He was recently divorced with 2 children in his custody and lived across the street from her. They were neighbors and became close friends. The Claimant even helped take care of Mike’s house and children when needed. Similarly, Mike helped Claimant with some of her personal matters. They developed a relationship of trust, confidence, and reliance upon each other years before Claimant opened her Centaurus...

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Mar 30, 2023

Aaron Graham Investigation For Alleged Broker Misconduct

The Law Offices of Robert Wayne Pearce, P.A. is representing two Co-Trustees of a family trust in a FINRA arbitration case against United Planners’ Financial Services of America and AG Financial advisor Aaron Graham for fraud, breach of fiduciary duty, professional negligence, negligence, and negligent supervision and fraudulent concealment of Graham’s misconduct. Aaron Graham Of United Planners’ Financial Services Of America A Limited Partner And AG Financial Has 4 Customer Complaints For Alleged Broker Misconduct. The Law Offices of Robert Wayne Pearce, P.A. is currently representing two Co-Trustees of a family trust who have filed an arbitration claim against his employer, United Planners’ Financial Services Of America, and Aaron Graham himself. IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with Aaron Graham and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. Please contact us online via our contact form or by giving us a ring at (800) 732-2889. Aaron Graham Customer Complaints Aaron Graham has been the subject of 4 customer complaints that we know about. Two of Aaron Graham’s customer complaints were settled in favor of investors. One of Aaron Graham’s customers’ complaints was denied, and, to date, the customer has not taken any further action. We represent another customer whose arbitration claim was recently filed and is pending. Current Allegations Against Aaron Graham A sample of the allegations made in the previously FINRA reported arbitration claim settlements and/or complaints for investment losses were as follows:  We currently represent two Co-Trustees of a family trust who have filed an arbitration claim against his employer, United Planners’ Financial Services Of America and Aaron Graham himself. A summary of the allegations made in the FINRA arbitration filed for investment losses realized by the family’s trust were as follows: 1. Introduction Beginning in the late summer 2017, Graham, who had written discretionary authority to manage Claimants’ account in a reasonable manner, deployed a highly speculative strategy involving speculative investments and an excessive amount of leverage, which were inconsistent with Claimants instructions, needs, financial condition, and agreements related to their brokerage and investment advisory relationships. Graham mismanaged Claimants’ TDA account and made other investments for Claimants in violation of securities law, state and securities industry rules and regulations, and brokerage and/or advisory agreements. Respondent Graham is a registered representative and agent of and employed by United Planners Financial Services of America (“UP”) and was held out as a stockbroker, investment advisor, investment manager, financial advisor, and financial planner with special skills and expertise in the management of securities portfolios and financial, estate, retirement, and tax planning matters. Graham was a Certified Trust Financial Advisor (CTFA), a designation he held since 1999 for expertise in trust and other fiduciary matters. As a registered principal with UP, Graham held FINRA Series 7, 9, 24, 63 and 65 and various insurance licenses. This arbitration was filed by Claimants as Co-Trustees of their family’s trust against Respondent UP and its registered representative Graham for his breach of brokerage and advisory agreements, statutory and common law fraud, breach of fiduciary duties, negligence, failures to act in Claimants’ “best interest,” unsuitable recommendations, misrepresentations, omissions, misleading statements, and other acts and omissions, which were fraudulently concealed from Claimants. 2. The Relevant Facts Claimants are 68 and 63 years, respectively. Neither one has had any education beyond high school. They both went to work immediately thereafter. They have been married since 1980 and have children. The husband went to work in the oil fields with his father, and the wife became a dental assistant.  In 1999, the Claimants formed a company that drilled the initial conductors, mouseholes, and ratholes for oil producers before they constructed the drilling rigs that drilled for the oil. This was the family business that the husband learned from his father. After his father retired, the husband set out on his own and became very successful in a short period. By 2008, the Claimants had accumulated several million dollars and were introduced to Graham through their friends in the oil business. Neither one of the Co-Trustees had any education or experience investing in the stock or bond markets prior to meeting him. Graham would travel from his Salt Lake City office to meet with his clients. On those occasions, he would stop by the Claimants’ office to visit and solicit their business. Eventually, Graham was successful in persuading the Claimants to open a TDA account, which Graham managed for a management fee on a discretionary basis. In 2010, the Co-Trustees sold their company and deposited all the sales proceeds along with their other savings previously deposited into the TDA account managed by Graham. By the end of 2010, Respondent UP’s agent Graham controlled $12.5 million of the Claimants’ life savings held in trust for them. Graham managed the TDA account exclusively; he did not consult with Claimants with respect to any transaction therein.  In or about 2011 Graham began to distribute $15,000 per month to Claimants. The next year he increased the distribution to $25,000 per month to Claimants. From inception of the relationship, Graham continuously assured Claimants they would have more than enough funds for a lifetime of distributions at a rate of $25,000/month. Indeed, this might have been true if Graham had only continued to manage the account as he was instructed and agreed. Initially, Claimants received monthly account statements from TDA at Claimants’ business office PO Box address. Graham also supplied Claimants with written reports supposedly summarizing the account activity and performance of the account. However, after the sale of the business, Claimants only received Graham’s summary reports and annuity statements at their home. Graham never notified TDA that the Claimants sold their business, moved, and no longer received TDA statements that may have been delivered to their former business office. When Claimants asked Graham about the whereabouts of the TDA statements, he told them he was receiving them and all they needed...

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Mar 18, 2023

J.P. Morgan Sued For Edward Turley’s Alleged Misconduct: $55 Million!

The Law Offices of Robert Wayne Pearce, P.A. has filed another case against Ex-J.P. Morgan broker Ed Turley for alleged misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts. The Law Offices of Robert Wayne Pearce has filed another case against J.P. Morgan Securities for alleged misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts continuing in fall 2019 and thereafter by Edward Turley (“Turley”), a former “Vice-Chairman” of J.P. Morgan. At the outset, it is important for our readers to know that our clients’ allegations have not yet been proven. IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with J.P. Morgan and Mr. Turley and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. Please contact us online via our contact form or by giving us a ring at (800) 732-2889. Latest Updates on Ed Turley – November 18, 2022 The Advisor Hub reported today that the former star broker with J.P. Morgan Advisors in San Francisco Edward Turley agreed to an industry bar rather than cooperate with FINRA’s probe of numerous allegations of excessive and unauthorized trading that resulted in more than $100 million worth of customer complaints. FINRA had initiated its investigation of Edward Turley as it related to numerous customer complaints in 2020. The regulator noted in its Acceptance Waiver and Consent Agreement (AWC) that the investors had generally alleged “sales practice violations including improper exercise of discretion and unsuitable trading.” According to Edward Turley’s BrokerCheck report, he had been fired in August 2021 for “loss of confidence concerning adherence to firm policies and brokerage order handling requirements.” On October 28th, FINRA requested Turley provide on-the-record testimony related to his trading patterns, including the “use of foreign currency and margin, and the purchasing and selling of high-yield bonds and preferred stock,” but Edward Turley through counsel declined to do so. As a result, Edward Turley violated FINRA’s Rule 8210 requiring cooperation with enforcement probes, and its catch-all Rule 2010 requiring “high standards of commercial honor,” the regulator said and he was barred permanently from the securities industry. Related Read: Can You Sue a Financial Advisor or Stockbroker Over Losses? Turley Allegedly Misrepresented And Misled Claimants About His Investment Strategy The claims arise out of Turley’s “one-size-fits-all” fixed income credit spread investment strategy involving high-yield “junk” bonds, preferred stocks, exchange traded funds (“ETFs”), master limited partnerships (“MLPs”), and foreign bonds. Instead of purchasing those securities in ordinary margin accounts, Turley executed foreign currency transactions to raise capital and leverage clients’ accounts to earn undisclosed commissions. Turley over-leveraged and over-concentrated his best and biggest clients’ accounts, including Claimants’ accounts, in junk bonds, preferred stocks, and MLPs in the financial and energy sectors, which are notoriously illiquid and subject to sharp price declines when the financial markets become stressed as they did in March 2020. In the beginning and throughout the investment advisory relationship, Turley described his investment strategy to Claimants as one which would generate “equity returns with very low bond-type risk.” Turley and his partners also described the strategy to clients and prospects as one “which provided equity-like returns without equity-like risk.” J.P. Morgan supervisors even documented Turley’s description of the strategy as “creating portfolio with similar returns, but less volatility than an all-equity portfolio.” Note: It appears that no J.P. Morgan supervisor ever checked to see if the representations were true and if anybody did, they would have known Turley was lying and have directly participated in the scheme. The Claimants’ representative was also told Turley used leverage derived from selling foreign currencies, Yen and Euros, to get the “equity-like” returns he promised. Turley also told the investor not to be concerned because he “carefully” added leverage to enhance returns. According to Turley, the securities of the companies he invested in for clients “did not move up or down like the stock market,” so there was no need to worry about him using leverage in Claimants’ accounts and their cash would be available whenever it was needed. The Claimants’ representative was not the only client who heard this from Turley; that is, he did not own volatile stocks and not to worry about leverage. Turley did not discuss the amount of leverage he used in clients’ accounts, which ranged from 1:1 to 3:1, nor did Turley discuss the risks currency transactions added to the portfolio, margin calls or forced liquidations as a result of his investment strategy. After all, Turley knew he could get away without disclosing those risks. This was because J.P. Morgan suppressed any margin calls being sent to Turley’s clients and he liquidated securities on his own to meet those margin calls without alarming clients.  This “one-size-fits-all” strategy was a recipe for disaster. J.P. Morgan and Turley have both admitted that Turley’s investment strategy was not suitable for any investor whose liquid net worth was fully invested in the strategy. It was especially unsuitable for those customers like Claimants who had other plans for the funds in their J.P. Morgan accounts in fall 2019 and spring 2020. Unfortunately, Turley recommended and managed the “one-size-fits-all” strategy for his best clients and friends, including Claimants. Turley was Claimants’ investment advisor and portfolio manager and required under the law to serve them as a “fiduciary.” He breached his “fiduciary” duties in making misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts. The most egregious breach was his failure to take any action to protect his clients at the end of February 2020, when J.P. Morgan raised the red flags about COVID-19 and recommended defensive action be taken in clients’ accounts. Turley Allegedly Managed Claimants’ Accounts Without Written Discretionary Authority Claimants’ representative hired Turley to manage his “dry powder,” the cash in Claimants’ accounts at J.P. Morgan, which he would need on short notice when business opportunities arose. At one point, Claimants had over $100 million on deposit with J.P. Morgan. It was not...

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Feb 28, 2023

What is FINRA Arbitration? Disputes, Process, and Guide

This is your definitive guide to FINRA arbitration in 2023. In this article you will learn: how disputes are handles under FINRA arbitration, the FINRA arbitration process, and what to expect if you are involved in a FINRA arbitration case. We will also cover the most important information that you will need to know about FINRA arbitration in 2023 so that you can be prepared if you find yourself involved in a case. What is FINRA Arbitration? FINRA arbitration is a forum for resolving disputes between investors and their brokerage firms or brokers, outside of court. It involves presenting evidence and arguments to a panel of arbitrators, who make a binding decision, called an award, on the dispute. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. As an investor, if you have suffered considerable investment losses caused by the behavior of your broker, then FINRA arbitration may be a viable solution. By filing for arbitration with FINRA, you could be entitled to recoupment or compensation from the brokerage firm responsible. It is highly recommended by FINRA that all investors seek the advice of a qualified FINRA attorney before filing for arbitration. FINRA Overview FINRA, the acronym for Financial Industry Regulatory Authority, governs disputes between investors and brokers and disputes between brokers. In this article, we solely concentrate on how an individual private investor files a claim to recover losses against their broker or financial advisor.  We will explain how FINRA fits into the securities regulatory scheme. We will discuss how FINRA provides services designed to resolve disputes in a cost-effective manner that is quicker than a traditional court and give some insight into how FINRA‘s arbitration procedure works. Next, we will examine the pros and cons of FINRA arbitration. Lastly, we will discuss how a highly experienced lawyer who has represented numerous clients successfully at FINRA arbitration can help you recover your damages from your broker or financial advisor.  What Is FINRA? FINRA is not a government agency. Unlike the Securities and Exchange Commission (SEC), FINRA is an organization established by Congress to oversee the brokerage industry. FINRA is a self-governing body and operates independently from the U.S. government. By contrast, the SEC more broadly regulates the buying and selling of securities on various exchanges such as the New York Stock Exchange, NASDAQ, and the American Stock Exchange. The SEC approves initial public offerings and secondary offerings and can halt trading to avoid a crash if necessary.  Additionally, the SEC has law enforcement powers. Along with the FBI and the U.S. Attorneys Office, the SEC can investigate acts surrounding the buying, selling, and issuing of securities. The U.S. Attorney can pursue charges for crimes relating to the stock market, such as insider trading and wire fraud. While the SEC has the authority to file civil lawsuits against any person or organization violating the securities statutes and the SEC’s rules. How Is FINRA Different from the SEC? FINRA has a different function than the SEC altogether. FINRA is a regulatory agency designed to promote public confidence in the brokerage industry and the financial markets as well. People will not invest if they believe they have trusted unscrupulous financial advisors to protect their economic interests. FINRA ensures that its members comply with the ethical rules of their profession, similar to a state bar for attorneys or a board of registration for medical professionals.  Congress granted FINRA authorization to investigate complaints investors make concerning misconduct, fraud, or potentially criminal behavior. As a result, FINRA can discipline its members if the agency determines that a broker violated its professional code. FINRA can assess fines, place restrictions on a broker’s authority, or expel the member from its ranks for an egregious violation. Anyone who suspects their broker or their financial advisor of wrongdoing should file a complaint with FINRA’s complaint center for investors.  You should be aware that FINRA’s rules do not restrict you from filing a complaint seeking an investigation into wrongdoing and pursuing monetary damages in arbitration.  FINRA Alternative Dispute Resolution FINRA provides a forum for investors to resolve their disputes with their brokers or financial advisors. In fact, FINRA boasts the largest securities dispute resolution forum in the US. FINRA offers arbitration services, as well as mediation services, as a means to avoid costly and inefficient litigation in courts. FINRA provides a fair, effective, and efficient forum to resolve broker disputes. FINRA’s goal is to settle disputes quickly and efficiently without the standard procedural and discovery requirements that bog down cases filed in courts.  How Does Arbitration Work with FINRA? Arbitration is an alternative to filing a case in civil court. Arbitration tends to be less formal and is designed to process claims more quickly than filing a lawsuit in court.  FINRA’s arbitration process involves resolving monetary disputes among brokers and investors. FINRA’s arbitrators can issue monetary judgments and have the authority to order a broker to deliver securities to you if that is a just resolution of the case.  An arbitration hearing is similar to a trial in court. The parties admit evidence and argue their side to a neutral person or panel of arbitrators who will decide the case. The arbitrator’s decision, called an award, is the judgment of the case and is final. You should know that you do not have the right to appeal the award to another arbitrator. You may have an opportunity to pursue an appeal in court under limited circumstances. However, you cannot elect to arbitrate your case and then file a complaint in court seeking a trial on the issues decided by the arbitrator.  FINRA’s arbitration forum operates under the rules set forth by the SEC. FINRA ensures that the platform serves as it should and facilitates ending disputes. No member of FINRA participates in the arbitration. FINRA merely provides the forum and enforces the rules. Arbitrators decide the cases.  The arbitrators typically need about 16 months to issue an award. This is a lot quicker than court, where cases...

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Jan 25, 2023

What is FINRA Rule 3210?

FINRA Rule 3210 is a newer FINRA rule, approved by the U.S. Securities and Exchange Commission (SEC) in the Spring of 2016 and rolled out the following year. The regulators’ goal in approving this rule was to prevent conflicts of interest by financial advisors and broker-dealers. To carry out this goal, the rule governs the ability of registered financial advisors to use investment accounts outside of the accounts offered by their FINRA member firm.  At the Law Offices of Robert Wayne Pearce, P.A., we are committed to helping you enhance your investor education and understand all the FINRA-registered broker-dealer rules that may impact your decision-making. What is FINRA Rule 3210? FINRA Rule 3210 requires all employees to notify their employers if they intend to open or maintain an investment account at a competing financial firm. Rule 3210 governs accounts opened by members at firms other than where they work. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. FINRA Rule 3210 also imposes conditions on accounts opened and maintained by associated persons of members, which include spouses, children, and other family members of the employee. IMPORTANT: Understanding rules like FINRA Rule 3210 can help you become a well-informed investor. It may also help you know what to look for when selecting a brokerage firm or a registered financial professional. FINRA Rule 3210 Broker Dealer Overview When an individual works for a brokerage firm, they typically keep their assets at that firm. The firm is therefore able to monitor their trades and can ensure that the financial advisor is not frontrunning their clients in a personal brokerage account. The firm can also monitor the financial advisor’s account for insider trading or other bad activity. But what happens when the financial advisor works for Bank A but wishes to keep their accounts at Bank B? Rule 3210 specifies that the financial advisor must receive written permission from Bank A to open the account at Bank B. Not only may the financial advisor not open the account without permission, but they must also declare any account in which they have a “beneficial interest.” This means that if their spouse has a brokerage account at Bank B, they must disclose that to their employer as well.  These FINRA-registered broker-dealer rules may seem challenging at first. However, they have been carefully implemented to protect investors from financial advisor conflicts of interest. Your Financial Advisor’s Requirements Under Rule 3210 Rule 3210 is not merely about allowing your financial advisor’s employer to see what is in their account. It is primarily about preventing conflicts of interest. In doing so, the rule requires: An important part of this rule is the written consent part. Everything must be in writing under Rule 3210. Indeed, keeping written records is a requirement under most FINRA-registered broker-dealer rules. Maintaining a record of requests and consents is important in this case because Rule 3210 pertains to conflicts of interest. FINRA does not have a set form for requests and consents under Rule 3210. Each firm creates its own FINRA Rule 3210 letters. The FINRA 3210 Letter Rule 3210 requires financial advisors to make a request and obtain consent from the FINRA member firm they work for to keep their accounts somewhere else. It also requires a disclosure letter to the outside firm when a securities industry professional opens an account. This disclosure action is sometimes referred to as a FINRA 3210 Letter. Making this disclosure is one important step in preventing conflicts of interest for either firm. Even more important than consent may be the fact that a financial advisor must submit duplicate brokerage statements to their employer. A financial professional may have their brokerage accounts at an outside firm. However, their employer must have transparency into their account activity just as if the accounts were in the employer’s custody. Rule 3210 is essential in balancing the right of financial professionals to use whichever brokers they choose with an employer’s need for compliance and a client’s need for transparency.  Close Family Members Must Also Comply with FINRA 3210 It may seem hard to believe that a FINRA broker dealer rule might apply to someone who doesn’t work in the financial services industry. But it’s true—FINRA 3210 requires disclosure of accounts from the following people related to a registered financial industry professional: In the event that both spouses work at FINRA member firms, then each spouse would have to comply with this rule. Both member firms would be notified about the other spouse’s accounts. Protecting Against Conflicts of Interest A primary goal of FINRA Rule 3210 is to prevent FINRA member conflicts of interest. Your financial advisor and your brokerage firm should be working for you, in your best interest. Where an undisclosed conflict is lurking, your broker simply cannot provide you with the advice or level of service you should expect.  An important part of investor education about FINRA broker dealer rules is to allow you to understand the issues behind rules like FINRA 3210. Being well-informed about what these rules are and how they work helps make you a savvy investor. You will be better equipped to ask questions about potential conflicts of interest. You will also know to ask about your brokerage firm’s compliance systems and record retention.  Related Read: What Constitutes a Breach of Fiduciary Duty? Concerned That a Conflict of Interest Has Led to Investment Loss? If you are concerned that a conflict of interest caused you investment loss, we are here to fight for your rights. When you engage an investment advisor or a brokerage firm, you expect the highest level of service. When these professionals fail to act in your best interest, they should be held accountable. Learn how you can file a formal FINRA complaint against your advisor. At The Law Offices of Robert Wayne Pearce, P.A., our practice focuses on all manner of investment-related litigation, FINRA arbitration, and dispute resolution. Our FINRA arbitration lawyers have the expertise and savvy to take on...

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Dec 30, 2022

FINRA Rule 3270: Outside Business Activities

When you engage a registered investment adviser to manage your money, you want to make sure that nothing will interfere with your securities professional’s duty to you. FINRA Rule 3270, referred to outside business activities, gives transparency to potential conflicts of interest your investment adviser may have.  FINRA Rule 3270 requires your investment advisor to disclose their outside business activities. The purpose of FINRA 3270 is to keep FINRA member firms accountable to you, the client. If you are concerned that your securities professional might have violated certain disclosure rules, a knowledgeable FINRA arbitration lawyer can help you understand your options. What is FINRA Rule 3270? FINRA Rule 3270 prohibits broker-dealers from engaging in any outside business activities that involve the sale of securities unless they have first provided written notice to their employing firm. “Outside business activity” refers to a registered person’s involvement in offering, purchasing, or selling securities outside of their broker-dealer’s regular business activities. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. FINRA Rule 3270 requires the disclosure of outside business activities. This FINRA regulation is a vital measure for protecting investors and ensuring that their advisor is prioritizing their interests. What is Considered a FINRA “Outside Business Activity”? FINRA outside business activities are broadly defined. FINRA Rule 3270 states that they include any paid work performed outside of a securities professional’s employment. This includes: This rule only requires an investment advisor to notify his or her employer of FINRA outside business activities. It does not require the investment advisor to do anything beyond provide a notification. Instead, the FINRA member firm makes a determination about what outside business activities are acceptable to the firm and its clients. The firm decides how or if outside business activities should continue to be carried out. Common Examples of FINRA Outside Business Activities Common examples of outside business activities include: Your investment advisor needs to report any of these activities to their employer under FINRA 3270.  The examples above are not exhaustive. An investment adviser also needs to report their wedding photography business or snorkel tour side-gig to their employer under the rules. FINRA rules about outside business activities apply to any paid work. Passive Investments Are Not Outside Business Activities While FINRA Rule 3270 casts a wide net, it allows investment advisers to make passive personal investments. Investing in diversified index funds or private securities transactions is not an outside business activity. Investment advisers may also put their personal funds into a blind trust. Blind trusts do not allow people to direct how their money is invested. Other FINRA rules require some disclosure about personal investments to ensure that your broker is being as transparent as possible about their potential conflicts of interest. FINRA Rule 3280 requires disclosure of private securities transactions. Your securities professional must strictly comply with this rule and its requirements. Your brokerage firm should ensure the investment adviser’s compliance with FINRA Rule 3280.  Responsibility of Brokerage Firms to Clients Once an investment advisor makes an outside business activities disclosure, the FINRA member firm must take important action. Each firm typically has its own form for reporting and its own protocol for review.  How Do Firms Determine Whether an Outside Business Activity Is Acceptable? Once a firm receives a disclosure, it needs to decide whether the outside business activities are acceptable. The FINRA member firm reviews all facts surrounding the disclosure. Then the firm answers two key questions to protect investors like you. First, Rule 3270 asks a FINRA member firm to consider all the circumstances surrounding the outside business activities. The review includes assessing the type of outside business, reviewing the time spent on the business, and confirming the type or amount of compensation received. The firm must decide whether outside business activities will interfere with the securities professional’s responsibilities to their employer and/or the firm’s clients. Second, Rule 3270 asks a FINRA member firm to think about whether outside business activities will be viewed by customers or the public as part of the member’s business. This review assesses whether a client would confuse the investment adviser’s outside business activities with their securities business.  How Do Firms Address Outside Business Activities That Conflict with an Advisor’s Duties? If the firm determines that the investment adviser’s outside business activities interfere with their responsibilities to the firm or its clients, then the firm should limit or prohibit the activity. FINRA Rule 3270 also requires firms to maintain a record of compliance. It is the firm’s responsibility to keep records of all outside business activities disclosures and compliance reviews. Brokerage firms are responsible to their clients to ensure that they are providing appropriate and conflict-free service in managing client assets. FINRA member firms must represent that their investment advisers are not engaging in outside business activities that compromise client interests. If you believe that your brokerage firm has failed to hold investment advisers accountable to FINRA Rule 3270 or otherwise adhere to conflict of interest rules, the firm may be liable for investor losses. Now may be the time to file a FINRA complaint against your advisor or broker. Have You Been Harmed by Your Investment Advisor’s Outside Business Activities? If you are an investor with concerns that your investment professional has failed to disclose important information to you, please call The Law Offices of Robert Wayne Pearce, P.A. Our FINRA arbitration lawyers have successfully represented individuals harmed by broker and investment advisor negligence or misconduct for over 40 years. Cases involving violations of FINRA rules are complex. Attorney Pearce has the expertise and experience to help you navigate any kind of securities or investment dispute. Contact our team today to discuss an evaluation of your potential case. Our team has recovered over $160 million for our clients, and we want to help you too.

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Nov 2, 2022

FINRA Statute of Limitations: A Complete Overview

The FINRA Statute of Limitations applies to claims and disputes that arise under the rules, regulations, or statutes administered by FINRA. Investment brokers have a duty to treat their clients honesty and with integrity. Those who take advantage of, mislead, or steal from their clients shake the investing industry’s foundation. Regrettably, broker misconduct occurs all too often.  You need representation from a FINRA arbitration attorney who has the knowledge, skill, and extensive experience to help you recover your losses if you are a victim of investment broker misconduct. Robert Wayne Pearce and his staff with The Law Offices of Robert Wayne Pearce, P.A., have over 40 years of experience fighting on behalf of investors victimized by broker misconduct. Contact us today to protect your rights.  Key Takeaways Investment brokers have a duty to their clients to be honest and act with integrity. FINRA is a non-profit corporation that works with the Securities and Exchange Commission to protect investors from brokerage firms’ wrongdoing. You need representation from a FINRA arbitration attorney who has the knowledge, skill, and extensive experience to help you recover your losses if you are a victim of investment broker misconduct. Investors aggrieved by their broker must understand that they do not have six years to file a court claim – in many instances, state statutes of limitations are much shorter than FINRA’s arbitration eligibility time frame. Filing your claim as soon as possible is the best way to protect your legal rights – if you suspect that you lost money in the market because of broker fraud, negligence, or misconduct. What Is FINRA? FINRA is an acronym for Financial Industry Regulatory Authority. FINRA is a self-regulating organization or SRO. As an SRO, FINRA is a non-profit corporation that works with the Securities and Exchange Commission to protect investors from brokerage firms’ wrongdoing.  FINRA offers professional examinations that certify applicants as investment brokers. It also provides continuing education programs to investment professionals to promote fairness and transparency in the securities markets.  FINRA has the authority to make rules and regulations that govern broker-investor relationships. It takes action to discipline brokers guilty of misconduct. Additionally, FINRA educates investors about their investment goals, strategies, and safe investing. What is the FINRA Statute of Limitations? FINRA’s procedural rules indicate that investors have six (6) years to file a claim for arbitration with FINRA. The six-year period starts when the event that gives rise to the legal claim occurred. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. Note: FINRA will dismiss any claim that FINRA decides missed the eligibility deadline. The arbitration panel will rule on eligibility if the parties disagree on whether the eligibility period elapsed. Do not delay filing. Speak with a FINRA lawyer about any questions about your arbitration claim. FINRA tolls, or stops, the eligibility period if the parties file the case in court. Moreover, FINRA’s procedural rules state that courts will toll the statute of limitations when the case remains in FINRA’s jurisdiction. Why Does FINRA Have a Statute of Limitations? There are a number of reasons why FINRA imposes a statute of limitations on investor claims. The first is to ensure that evidence related to the claim can still be reasonably obtained. This ensures that investors don’t wait until it’s too late to pursue their claim, and also protects brokerages from false or fraudulent accusations brought years after the events in question. In addition, FINRA’s statute of limitations helps to protect the integrity and reliability of its arbitration process. By ensuring that claims are brought within a reasonable timeframe, FINRA is able to accurately and fairly assess all evidence related to an investor claim in order to render an informed decision on their case. FINRA offers arbitration and mediation services to investors who file a complaint against their broker or brokerage firm. The victimized investor must file their claim with FINRA’s arbitration board within a specified period of time. The investor contemplating pursuing a legal cause of action for their losses should be aware of other deadlines that affect their claim. FINRA Statute of Limitations Concerns FINRA’s arbitration eligibility rules are distinct from federal or state statutes of limitations. Investors aggrieved by their broker must understand that they do not have six years to file a court claim. In many instances, the statutes of limitations are much shorter than FINRA’s arbitration eligibility time frame. Section 10(b) of the Securities and Exchange Act of 1934 and its regulations grant investors the right to sue their broker or advisor for fraud or any other unfair practice. Section 10b and its regulations found at 17 C.F.R. 240.10b-5 have a two-year statute of limitations.  Under these rules, the two-year statute of limitations starts when the investor discovers the fraud or no more than five years after the alleged fraud occurred. The time when the investor discovered the fraud is essential to understand. Otherwise, you might unwittingly allow the statute of limitations to run out before having the chance to file your claim. The statute of limitations starts when the investor knew or should have known about the fraud.  You must understand your investments and how they work so you can uncover evidence of fraud as soon as possible. If you are unsure if you are the victim of fraud, you must contact a knowledgeable and reputable securities attorney to protect your rights and investment. State Statutes of Limitations Some states will allow you to file a lawsuit in state court for a violation of state law. Filing in state court might be the better option for an aggrieved investor. Statutes of limitations for state law claims could be as short as two years.  How Long Do I Have to File a Claim Against My Broker? Filing your claim as soon as possible is the best way to protect your legal rights. Simply because FINRA agreed to arbitrate a claim within six years does not mean you should wait six years to file. Instead, you should be...

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Aug 2, 2021

FINRA Rule 2165: Financial Exploitation of Specified Adults

Are you curious about how FINRA Rule 2165 can protect you or a loved one who is being financially exploited? FINRA Rule 2165 helps families and brokers who suspect securities fraud in a vulnerable adult’s account. It allows them to take key actions against investment loss.  While their broker may be trustworthy, your parents or other elderly loved ones may reach a point where they are no longer able to make sound investment decisions. A common example of this is when a parent becomes involved in a Ponzi scheme. Another often-seen scenario is when a parent is defrauded into allowing a nefarious third party access to their accounts. Their accounts are quickly drained before an eagle-eyed broker or a caring son or daughter suspects investment fraud. FINRA Rule 2165 is designed with folks like senior citizens in mind. The rule helps a broker look out for their vulnerable clients’ interests. It also enables them to do so before losses become catastrophic.  FINRA Rule 2165: Financial Exploitation Defined FINRA Rule 2165 defines “financial exploitation” as consisting of either of two circumstances. First, Rule 2165 identifies financial exploitation as the wrongful or unauthorized taking or use of a specified adult’s funds or securities. This first definition is very broad and can encompass many types of financial exploitation. Second, Rule 2165 defines financial exploitation as any action or omission, including through a power of attorney or a guardianship, to do any of the following things:  Obtain control over a specified adult’s money, assets, or property through deception, intimidation, or undue influence; or  Steal the specified adult’s money, assets, or property.  FINRA Rule 2165 only protects “specified adults.” These are vulnerable people who may not be able to make their own financial decisions. FINRA Rule 2165 defines a “specified adult” as: A person age 65 or older; or A person age 18 or older who has a mental or physical impairment that impacts their ability to look after their own interests. The financial exploitation definition under FINRA Rule 2165 relates only to actions taken against specified adults. If you do not fit into the category of “specified adult,” you still may have been the victim of securities fraud. If so, it’s important to reach out to an experienced securities fraud attorney as soon as possible.  How FINRA Rule 2165 Protects Vulnerable Adults from Financial Exploitation FINRA Rule 2165 and its sister rule, FINRA Rule 4512, protect vulnerable adults from financial exploitation. These rules work together to allow a vulnerable person’s broker to freeze disbursement of funds from an account suspected of financial exploitation. They also allow a broker to notify a vulnerable person’s important contacts when the broker suspects financial exploitation is taking place. Preventing the Disbursement of Funds When Financial Exploitation Is Suspected A broker is able to place a temporary hold on a disbursement of funds or securities from a specified adult’s brokerage account if/when: A broker has a reasonable belief that financial exploitation has been or will be attempted, has occurred or is occurring; A broker notifies all parties authorized to transact in the account, as well as the account’s trusted contacts, about the temporary hold and the reason for it; and A broker initiates an internal review of why they believe financial exploitation was taking place. The notification to authorized persons on the account can be made orally or in writing (electronic communication is okay) within two business days. Brokers must communicate clearly and quickly about the temporary hold and the reason for the temporary hold. When working with specified adults, a broker needs to maintain a list of trusted contacts. A trusted contact person does not have to be a signatory on the account but can be anyone the broker can share important account information with.  Notification is a very important element of Rule 2165 because placing a hold on client funds is no small matter. However, if the broker suspects that the trusted contact is the person perpetrating the fraud, the broker is no longer under an obligation to notify them.  Rule 2165 Amends Other Protections Against Exploitation The SEC adopted FINRA Rule 2165 in February 2018, which amended FINRA Rule 4512. Previously, Rule 4512 only required brokers to collect and maintain basic personal data about their clients. Now, brokers are required to make reasonable efforts to obtain and maintain the name of a trusted contact person as well.  This revised rule is a great resource for investors and brokers alike. As the investor population ages, trusted contacts can be an excellent resource for brokers to share concerns about unusual client behavior or diminished capacity to make investment decisions. Early communication can lead to better results for investors, caregivers, and brokers. It can even prevent financial exploitation in the first place. Brokers Are Responsible for Compliance  Brokers now must make decisions about whether their clients have the ability to make financial decisions for themselves. This can be difficult and even embarrassing where brokers and clients have worked together for many years. Cognitive abilities of aging people and people with disabilities can change dramatically in short periods of time. Determining if and when a client is at risk of financial exploitation is a very delicate task. The responsibility falls on brokers to understand when transactions are legitimate or not.  Contact a Securities Fraud Attorney If you or a loved one has been financially exploited, you may have a legal right to pursue action against responsible parties. Experience is key in litigating cases like these. We at The Law Offices of Robert Wayne Pearce, P.A., are eager to help you understand your rights. Robert Pearce has many years of experience in the area of securities fraud. He has arbitrated and mediated hundreds of investment-related disputes in his career. Our team of experienced investment loss litigators has recovered over $160 million dollars for well-qualified investors. We help investors nationwide and internationally pursue claims for a variety of investment losses and frauds. Contact us today about a free initial consultation on your...

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Jul 13, 2021

Understanding FINRA Rule 2111: Suitability

As an investor, you may have heard of FINRA Rule 2111, also known as the suitability rule. But what exactly is FINRA 2111? And how does it affect you and your investments?  When you hire a brokerage firm or financial advisor to make transaction or investment strategy recommendations, you expect that they will do so in a manner that is suitable for you and your particular circumstances. Unfortunately, however, this is not always the case. If you have suffered financial losses as a result of unsuitable investment strategies and recommendations by your financial advisor, contact securities law attorney Robert Wayne Pearce today.  An Overview of FINRA Rule 2111 Suitability in investing is an overarching concept that describes whether an individual investment is suitable for a client after consideration of that particular client’s characteristics.  The suitability rule requires financial advisors to have a “reasonable basis” to believe that a recommended transaction or investment strategy is suitable for their client. A financial advisor determines the suitability of a particular transaction or investment strategy through learning about the investment profile of his or her customer. Experts interpret FINRA Rule 2111 as requiring financial advisors to make recommendations that are in their customer’s best interests. FINRA outlines situations involving financial advisors violating the suitability rule by placing their interests above the interests of their client, including: Financial advisors who recommend that clients use margin to purchase a larger number of securities to increase commissions;  Brokers who recommend unsuitable securities with high commissions because of pressure from their firm to sell the securities; or A broker who recommends one product over another with the goal of earning more commissions. Unsuitable investment recommendations lead to thousands of dollars in losses for investors every year based on financial advisors recommending products that are illiquid, speculative, and high-risk. If this has happened to you, contact an experienced investment losses attorney today to get started on your case. Suitability Obligations Imposed by FINRA Rule 2111 Rule 2111 consists of three primary obligations: reasonable basis suitability, customer-specific suitability, and quantitative suitability. Reasonable Basis Suitability Reasonable basis suitability mandates that a financial advisor have a reasonable basis, based on reasonable diligence, to believe that a recommendation is suitable for the public at large. This reasonable diligence should provide the financial advisor with a basic understanding of risks and rewards associated with the recommended transaction or investment strategy.  A broker must comprehend the risks and rewards associated with a particular investment. Failure to do so and recommending the investment to a client anyway could result in charges of misrepresenting the investment.  If a broker fails to comply with any of these requirements, the reasonable basis suitability obligation is not met.  Customer-Specific Suitability Customer-specific suitability involves considering specific details about an individual customer to determine whether a transaction or investment strategy is suitable.  A customer’s characteristics that are to be considered during a suitability analysis include: Employment status, Age, Financial situation, Tax status, Experience investing, Investment goals, Risk tolerance, Liquidity needs, and Investment time horizon. The financial advisor should evaluate these characteristics in determining whether the investment or strategy is suitable for that particular customer. Quantitative Suitability The quantitative suitability element evaluates the volume of trades made by a financial advisor.  For a quantitative suitability analysis, transactions made in a customer’s investment account are viewed in the aggregate. The question is whether the investments recommended qualify as a suitable strategy overall, not whether each individual transaction was suitable. The quantitative suitability obligation seeks to prevent financial advisors from making excessive trades in a client’s account solely for the purpose of generating commission fees.  Contact an Investment Loss Attorney Today FINRA 2111 investment loss cases can be particularly complex. That’s why it is important to have an experienced investment loss attorney in your corner.  Since 1980, the attorneys at The Law Offices of Robert Wayne Pearce, P.A., have represented countless investors as they fight for their rights. If you are a victim of broker negligence or misconduct, we want to help. We have recovered over $160 million for well-deserving clients, and we will fight to get you the results you deserve too.  Contact our team today for your free case evaluation, and see what we can do for you.

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