Scott Goldman, a stockbroker formerly registered with LPL Financial Corporation (LPL Financial), submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined $10,000 and suspended for 20 days for allegedly making unsuitable recommendations of a leveraged, overconcentrated precious metals investment to an elderly widow.
According to FINRA, Mr. Goldman used several different investment strategies (referred to as “Champion Models” by Mr. Goldman) in which he invested his customers’ accounts in mutual funds with a mutual fund family or through subaccounts of a variable annuity. FINRA found that one of Mr. Goldman’s Champion models was the “Champion Precious Metals Model,” which was identified as the most risky due to the fact that it was concentrated in the volatile precious metals sector. Further, the Champion Precious Metals Model used leveraged mutual funds, furthering the risk to investors.
Mr. Goldman is alleged by FINRA to have recommended that his elderly, widowed customer invest in this high-risk Champion Precious Metals Model. His first recommendation involved a $135,000 investment and the second recommendation involved an additional $188,219 investment. Mr. Goldman’s elderly customer had, at this point, 53% of her liquid net worth invested in this high-risk investment. These recommendations were highly unsuitable for the customer given her financial situation and needs and the concentration level in a leveraged fund and a single, volatile sector like precious metals. Without admitting or denying FINRA’s findings, Scott Forrest Goldman, of Lincolnshire, Illinois, consented to the entry of findings was suspended by FINRA for 20 days and assessed a fine of $10,000. The suspension was in effect from January 17, 2017 through February 5, 2017.
Stockbrokers have been known to engage in many practices that may violate industry and firm rules, practices, and procedures. In order to protect investors from such stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a reasonable supervisory system. The implementation of the rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and 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 liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered losses stemming from unsuitable recommendations can bring forth claims to recover damages against broker-dealers, like LPL Financial, which should consistently oversee its brokers’ activities in order to prevent the above-described prohibited conduct.
Have you suffered losses in your LPL Financial account due to your stockbroker’s unsuitable recommendations? Did your stockbroker overconcentrate your investment in a volatile sector like precious metals? 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 LPL Financial stockbrokers who may have engaged in unsuitable trading strategies 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 email@example.com for answers to any of your questions about this blog post and/or any related matter.