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GF Investment Services Broker Barred by FINRA for Unsuitable ETF Hold Recommendations

Richard William Lunn Martin, a former registered representative with GF Investment Services, LLC, submitted an Offer of Settlement in which he was barred by the Financial Industry Regulatory Authority’s (FINRA) due to findings that he made unsuitable ETF hold recommendations which resulted in losses to his customers of approximately $2.4 million.

Richard William Lunn Martin, of Johor, Malaysia, allegedly solicited, purchased and recommended his customers hold non-traditional ETFs in their accounts for years – an unsuitable recommendation for any customer.  Non-traditional ETFs are typically designed to achieve their objectives over the course of one trading session, i.e., one day.  In fact, FINRA Regulatory Notice 09-31 advises broker dealers and their registered representatives that non-traditional ETFs “are typically not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.” 

Mr. Martin, on the other hand, allegedly believed that the world economy was on the brink of collapse and advised his customers to invest in and hold non-traditional ETFs to hedge against the impending catastrophe.  FINRA found that nearly all of Mr. Martin’s customers were advised to invest in and hold these risky investments for lengthy periods of time, noting that nearly all of his customers were 75-99% over-concentrated in the ETFs.  Consequently, his customers sustained significant losses as a result of his recommendations.  According to FINRA, his customers’ losses were approximately $2.4 million.  Mr. Martin’s commissions received from his entirely unsuitable recommendations totaled $55,912.  Without admitting or denying FINRA’s findings, Mr. Martin was barred from association with any FINRA member in all capacities.

Stockbrokers have been known to engage in many types of practices that may be in violation of industry and firm rules, practices, and procedures.  In order to protect investors from these types of stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system.  The implementation of these 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 which flow from the misconduct. Therefore, investors who have suffered losses stemming from unsuitable recommendations, including unsuitable hold recommendations, by their broker can bring forth claims to recover damages against broker-dealers, like GF Investment Services, which should consistently oversee its brokers’ activities in order to prevent the above-described prohibited conduct.

Have you suffered losses as a result of your stockbroker’s unsuitable hold recommendation?  Have you suffered losses in your GF Investment Services or any other brokerage account due to unsuitable recommendations 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 GF Investment Services stockbrokers and other financial professionals who may have engaged in broker 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.