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:
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 to the management fees. Weldon encouraged one or more Claimants and others to refinance their homes and deposit the mortgage proceeds in their accounts. He encouraged the company to use its working capital line-of-credit and deposit the funds in its managed account by falsely claiming he was making more money for the company than they could earn in the bank until they needed the funds. Weldon wanted another $2 million; fortunately, the company only deposited $1 million and probably avoided an additional $1 million in losses.
The Respondents’ registered representative, Weldon, never created customized portfolios for each investor. Rather, he took the cookie-cutter approach of purchasing and just holding the same securities in all of Claimants’ portfolios: AMBA, AMD, DHR, MU, NIO NVDA, ROKU, SQ, NIO, TSLA, VEEV, and WYNN. The only customization was the quantity in each account which was dictated by the amount of money Claimants deposited in their accounts. In the first six months, Weldon steadily added to the positions and did so by borrowing against the securities in margin accounts. By the end of the summer in 2021, all Claimants’ CAN Accounts were leveraged 2:1 or more!
Not only did Weldon buy the same securities in the CAN Accounts but he breached his fiduciary duties and negligently held them in each of the Claimants’ over-leveraged, over-concentrated, and volatile CAN Accounts as the market began to collapse in January 2022. As Weldon watched the markets collapse, he also watched the net equity in all Claimants’ accounts approach the minimum house margin requirement but took no action until he received or perceived a margin call was imminent in Claimants’ accounts. By the end of February 2022, Claimants’ accounts were leveraged 3:1. As Claimants’ portfolio manager, Weldon did nothing to curtail the substantial losses in all Claimants’ accounts. What did the CAN supervisor do in connection with Claimants’ CAN Accounts? Nothing! Perhaps it was because the supervisors were in El Segundo, California sitting on their hands when Claimants were suffering substantial losses.
The Investment Center (“TIC”) Accounts
Instead of protecting the Claimants’ accounts, all Weldon did was move them to another brokerage firm at a critical time. We do not know the reason for the move from Respondent CAN to Respondent TIC but we suspect it was not voluntary or known to anyone other than Weldon and his former employer. The ACAT transfer process which began in the third week of February put all account activity in limbo until it was completed for each account at month-end. Weldon who was Respondent CAN’s headache now became Respondent TIC’s problem child. TIC was now responsible for reviewing all Claimants’ accounts upon transfer (the “TIC Accounts”) and making sure there were no securities law or FINRA rule violations.
Weldon, once again, prepared and completed the TIC new account opening documents and agreements for managed TIC Accounts with false and/or misleading information to suit his strategy and own “best interest,” as opposed to Claimants. Weldon, once again, prepared and had all the Claimants sign management agreements that 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 along with commissions to do so.
The paperwork Weldon completed along with the over-leveraged, over-concentrated, and volatile accounts raised or should have raised red flags to his new supervisors. Yet no TIC supervisor reached out to Claimants to discuss their accounts. Perhaps, it was because they supervisor was in Bedminster, New Jersey and it was easier to just tell Weldon to transfer the accounts somewhere else when margin calls were issued or about to be issued and he was forced to liquidate position to stay above the minimum house maintenance requirements. Once again, Claimants suffered substantial losses in their accounts when Weldon was Respondent TIC’s responsibility.
The Independent Financial Group (“IFG”) Accounts
It was only six weeks after Weldon caused Claimants and many of his other clients to transfer their accounts to Respondent TIC that he solicited them to move again, this time to Respondent IFG. Instead of protecting the Claimants’ accounts, all Weldon did was move them to another brokerage firm during a crisis. We do not know the reason for the move from Respondent CAN to Respondent TIC but we suspect, once again, it was not voluntary or known to anyone other than Weldon and his employer. Weldon, who was then Respondent TIC’s headache now became Respondent IFG’s problem child. IFG was responsible for reviewing all Claimants’ accounts (“IFG Accounts”) and making sure there were no securities law or FINRA rule violations.
Weldon, once again, prepared and completed the IFG new account opening documents and agreements for managed TIC Accounts with false and/or misleading information to suit his strategy and own “best interest,” as opposed to Claimants. Weldon, once again, prepared and had all the Claimants sign management agreements that 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 along with commissions to do so.
The ACAT transfer process from TIC to IFG which began in the second week of April, once again, put all account activity in limbo until it was completed for each account just before month-end. In the interim, Claimants’ portfolios further declined in market value and became subjected to risk of, and in some accounts actual, margin calls. Weldon attempted to meet the anticipated margin call by liquidation of securities and when he failed to timely do so, Pershing issued “sellout” orders and certain positions were forcibly liquidated causing Claimants to realize more losses.
In May 2021, Weldon tried to put a band-aid on the bleeding; it is unclear how, but he caused the assets in Claimants’ ProFunds Accounts to be deposited in the IFG Accounts. Notwithstanding, the hemorrhaging continued in the IFG Accounts. There were more liquidations and “sellouts” in September which eventually led to the closing of all Claimants’ IFG Accounts before the end of last year with additional losses.
3. The Wrongful Conduct
The acts and omissions of Respondents through their employees, including, Weldon, constituted breach of fiduciary duty, negligence, and negligent supervision. In addition, there were numerous violations of the FINRA Code of Conduct (the “FINRA Code”), directly and indirectly in breach of their contracts to follow the FINRA Code.
At the outset, it is important to understand that CAN, TIC, IFG and Weldon served Claimants not only in their broker-dealer capacities but in their capacities as registered investment advisers. This is how Respondents and Weldon held themselves out to the public and to Claimants from the inception of the relationship. The Claimants each contracted with Respondents and Weldon to act as investment advisers and paid them periodic fees to recommend the appropriate account relationship and to continuously provide investment advice and to continuously monitor and manage their accounts in a manner that would always be in their best interest and protect them from unreasonable risk of loss.
The fact that Respondents, Weldon and others on his team were investment advisers is an important distinction in this case because an investment adviser is unequivocally a “fiduciary” who has a special relationship with the client and held to a higher standard of care. An adviser’s fiduciary duty is imposed in recognition of the nature of the relationship between an adviser and its client—a relationship of trust and confidence. SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 194 n. 2 (1963) (“SEC v. Capital Gains”). There are no ifs or buts in this case about whether Respondents and their employees owed Claimants any fiduciary duties, including, but not limited to, a duty of care and a duty of loyalty. These fiduciary duties are based on equitable common law principles and fundamental to any investment advisers’ relationship with their clients under the Investment Advisers Act of 1940 (“Advisers Act”) and at common law.
This combination of care and loyalty obligations has been characterized as requiring the investment adviser to always act in the “best interest” of its client. See SEC v. Tambone, 550 F.3d 106, 146 (1st Cir. 2008) (“SEC v. Tambone”); SEC v. Moran, 944 F. Supp. 286, 297 (S.D.N.Y 1996) (“SEC v. Moran”) (“Investment advisers are entrusted with the responsibility and duty to act in the best interest of their clients.”). The fiduciary duty to always act in the best interest of the client requires an adviser “to adopt the principal’s goals, objectives, or ends.” Arthur B. Laby, The Fiduciary Obligations as the Adoption of Ends, 56 Buffalo Law Review 99 (2008); see also Restatement (Third) of Agency, § 2.02 Scope of Actual Authority (2006) (describing a fiduciary’s authority in terms of the fiduciary’s reasonable understanding of the principal’s manifestations and objectives). This means the adviser must always serve the best interest of its client and not subordinate its client’s interest to its own. The investment adviser’s obligation to act in the “best interest” of its client is an overarching principle that encompasses both the duty of care and the duty of loyalty.
The foregoing discussion about “fiduciary duties” is important to this case because Respondents and Weldon directly and/or indirectly breached their “fiduciary duties” to Claimants by, among other things: (1) the failure to employ modern portfolio techniques such as asset allocation and diversification to protect Claimants’ assets from unreasonable risk of loss; (2) the failure of Weldon and others to safeguard and protect Claimants’ assets from an unreasonable risk of loss; (3) the failure of Weldon and others to perform their fiduciary and contractual duties to sell securities and reduce the debt promptly and in a manner to serve the best interest of Claimants; (4) misleading Claimants about the risk of his investment strategy; (5) continuing to “hold” an unsuitable, undiversified, and over-leveraged investment strategy in Claimants’ managed accounts when market conditions dictated otherwise; (6) failing to refrain from self-dealing and conflicts of interest relating to the opening of the accounts and their investment strategy recommendations; and (7) the failure of Respondents and Weldon to adequately disclose conflicts of interest relating to his compensation and the investment advice given and investment strategy recommendations provided to Claimants.
Weldon’s acts and omissions as a “fiduciary” were evidently contra to what a “prudent” portfolio manager would have done when managing Claimants’ accounts. Weldon failed to exercise reasonable care and caution and failed to make reasonable business decisions by continuing to “hold” an undiversified and over-leveraged portfolio of securities in the high risk technology sector. Rather than protecting Claimants’ assets, Weldon recommended and executed an extraordinarily speculative leverage investment strategy in the portfolio, and he continued to do so when he should have diversified the portfolio and/or liquidated enough securities in order to protect Claimants’ accounts from unreasonable risk of loss. Instead, Weldon took unreasonable and conflicting risks between November 2021 and June 2022 that were not in Claimants’ “best interest” and caused Claimants to suffer substantial damages.
Raymond Weldon Red Flags & Your Rights As An Investor
Of course, C. Raymond Weldon did not admit to any of the allegations. But regardless of whether an arbitration award was entered, a settlement occurred, or the customer complaint is still pending, the allegations made by customers are red flags which should put all current and former customers of C. Raymond Weldon at Independent Financial Group, LLC, The Investment Center, Inc. and Cetera Advisor Networks LLC on alert to review carefully the activity and performance of their accounts and question whether Charles Weldon has engaged in any stockbroker misconduct that may have caused them investment losses. The large number of customer complaints at Independent Financial Group, LLC, The Investment Center, Inc. and Cetera Advisor Networks LLC also raises questions about the brokerage firms’ supervisory practices. If these red flags raise questions, call us and we will inform you of your rights as an investor.
File A Claim To Recover Your Investment Losses At Cetera Advisor Networks, The Investment Center And/Or Independent Financial Group Due To C. Raymond Weldon
If you have questions about Independent Financial Group, LLC, The Investment Center, Inc., Cetera Advisor Networks LLC and/or Charles Weldon and the management or performance of your accounts, please contact Attorney Pearce for a free initial consultation via email or Toll Free at 1-800-732-2889.