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Feltl & Company Representative Fined and Suspended for Unsuitable UIT Switching

Lance Ziesemer of Waconia, Minnesota submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement for the Financial Industry Regulatory Authority (FINRA) for allegedly implementing a trading strategy and making unsuitable recommendations to two customers in connection with Unit Investment Trusts (UITs). From May 2007 until February 3, 2016, Mr. Ziesemer was registered with Feltl & Company (Feltl) as a General Securities Representative (GSR) and General Securities Sales Supervisor.

During his association with Feltl, Mr, Ziesemer recommended that a number of his customers buy and sell UITs. Between January 2011 and December 2012, Mr. Ziesemer recommended that two customers repeatedly sell UITs that they had held for a short time only to repurchase different UITs. The customers following Mr. Ziesemers recommendations made 36 short-term UIT switches.

UITs are not designed to be used as trading vehicles and typically carry significant upfront charges making short term trading generally improper. These short-term UIT transactions resulted in approximately $160,000 in combined net losses for the two Feltl customers. Additionally, Mr. Ziesemer received $38,889 in commissions for the alleged unsuitable UIT recommendations.

This alleged conduct is a violation of NASD Conduct Rule 2310, FINRA Rule 2111, and FINRA Rule 2010. Without admitting or denying the FINRA allegations, Mr. Ziesemer agreed to the sanctions and was suspended from association with any FINRA member for three months and ordered to pay a $7,500 fine.

FINRA rules require brokerage firms to establish and implement a reasonable supervisory system to protect customers from the risks associated with investing. The implementation of the rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for investment losses which stem from their employees’ misconduct. Therefore, investors who have suffered losses due to a brokerage firm’s failure to supervise the unsuitable recommendations of its representatives can bring forth claims to recover damages against firms, like Feltl & Company, which have a duty to supervise employees in order to protect their customers’ interests.

Have you suffered losses in your Feltl & Company account due to supervisory failures? 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 Feltl & Company 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.