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Securities America Broker Fined and Suspended for Unsuitable CSMIF Preferred Notes Recommendations and Trades

Stuart Horowitz, a former registered representative with the Coral Springs, Florida branch of Securities America, Inc., submitted a letter of Acceptance, Waiver, and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) sanction and findings that he made unsuitable recommendations and trades in CSMIF preferred notes of an unregistered limited partnership investment fund despite numerous red flags that the fund was not a viable investment.

FINRA found that Stuart Horowitz requested that his member firm, Securities America, quickly approve the CSMIF preferred notes fund so he could begin selling them.  While awaiting a third-party due diligence report, the firm agreed to allow Mr. Horowitz to offer the CSMIF preferred notes for sale to existing fund investors.  Mr. Horowitz emailed his customers with an interest in the fund and recommended they move forward with an investment conversion.  FINRA noted that recommendations were made despite the fact that Mr. Horowitz was aware of numerous red flags, including that his previous member firm had decided not to allow the sale of the CSMIF preferred notes due to concerns about the fund’s ability to generate income for investors.

According to FINRA, Mr. Horowitz’s branch office converted over $8 million to the CSMIF preferred notes, which required additional contributions from his customers of over $2.5 million.  Mr. Horowitz was allegedly responsible for all but $137,500 of the conversions and was paid over $200,000 in net commissions.  The Fund began making late payments to investors, and within months, stopped making payments altogether.  Due to the aforementioned misconduct, Stuart Horowitz was assessed a deferred fine of $100,000 and suspended from association with any FINRA member in any capacity for one year.

Stockbrokers, registered representatives, and other financial professionals have been known to engage in many types of fraudulent and prohibited behavior which violate industry rules and procedures.  In order to protect investors from such misconduct, FINRA rules require broker-dealers to establish and implement a supervisory system in order to safeguard customer assets.  If broker-dealers and their supervisors do not establish and implement these protective measures, they may be liable to account holders for investment losses.  As a result, account holders who have suffered losses stemming from a registered representative’s misconduct and/or unsuitable securities recommendations can file a claim to recover damages against broker-dealers, like Securities America, which have a duty to supervise its employees in order to prevent the above-described misconduct.

Have you suffered losses in SCMIF preferred notes or other unsuitable investments?  Have you suffered losses in your Securities America account due to unsuitable recommendations or trades made by your broker?  If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.  Mr. Pearce is accepting clients with valid claims against Securities America stockbrokers who may have engaged in misconduct and caused investors losses.

The most important of investors’ rights is the right to be informed!  This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida.  For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues.  The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally!  Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.