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Investment Center Representative Complaints Lead to Investigation and Firm Fine

President of The Investment Center, Inc. (Investment Center) Ralph Devito was named as a Respondent in a Texas State Securities Board (TSSB) investigation that alleged Mr. Devito failed to properly supervise a registered representative with the firm. The investigation arose after the TSSB received a complaint alleging an Investment Center employee recommended unsuitable investments.

As President of The Investment Center, the firm’s written procedures required Mr. Devito to conduct a reasonable investigation into a representative’s activity. The TSSB found that between January 2010 and March 2014, an Investment Center employee recommended and executed several securities transactions that raised numerous “red flags.” TSSB alleges Mr. Devito either failed to notice or chose to ignore those “red flags” in client accounts. The investigation found that a majority of the representatives’ clients held over 95% of their total assets in equity positions of a single energy company.

The report further alleges the Investment Center agent held his client positions even after an exception report alerted the firm of declining assets in customer accounts. As President of The Investment Center, Mr. Devito was responsible for properly supervising representatives and conducting appropriate investigations based on reported conduct.  During the course of the investigation, Mr. Devito paid the investor $98,000 to resolve the issues associated with the complaint filed with the Investment Center member. The TSSB found Mr. Devito violated §115.10(b)(1) of the Rules and Regulations of the Texas State Securities Board and The Investment Center was therefore reprimanded and ordered to pay a $50,000 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 The Investment Center, which have a duty to supervise employees in order to protect their customers’ interests.

Have you suffered losses in your Investment Center account due to unsuitable broker recommendations? 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 The Investment Center 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.