Douglas Finlay Jr. of Point Pleasant Beach, New Jersey submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority under the allegations that he recommended and effected an unsuitable transaction in a customer’s account.
Finlay first became registered with FINRA as a General Securities Representative (GSR) in April 1998 through Cadaret Grant & Co., Inc. (Cadaret Grant). In 2001, Finlay became a General Securities Principal and remained at Cadaret Grant until he voluntarily filed a Uniform Termination Notice or Securities Industry Registration (Form U5) in December 2013.
FINRA alleged that Finlay recommended and executed an unsuitable transaction in the account of a Cadaret Grant customer by over-concentrating the client’s assets in an illiquid real estate investment trust (REIT) and failed to adequately disclose information to the customer in regard to the REIT. NASD Conduct Rule 2310(a) states that a recommendation should be suitable for a customer upon a basis of their financial status, age, and necessities.
In 2009 Finlay allegedly recommended to a client that she invest 100% of her retirement funds in a REIT. The client was 55 years old, had an investment objective of “growth and income” and had a moderate risk tolerance. FINRA alleged that Finlay failed to disclose information in regard to the REIT, including that the investment was illiquid and highly speculative. At the time, procedure at Cadaret Grant limited the amount of a customer’s assets that could be invested in REITS to “10% of the investor’s net worth”.
In July 2009, the customer invested nearly $116,625 which constituted 100% of the client’s retirement funds and nearly 100% of her liquid net worth, in the REIT. Finlay received $6,639.23 in commissions from the customer’s investment. FINRA further alleged that Finlay falsified the clients account form. FINRA claimed that Finlay handwrote on the account form that the client’s net worth was $1,355,000 and that her annual income was $150,000. However, the client’s actual net worth was approximately $135,000 with an approximate annual income of $70,000.
FINRA found that Finlay’s recommendation to invest her retirement savings in a single REIT was unsuitable for her moderate risk tolerance and investment objectives. For the alleged unsuitable recommendation, Finlay violated NASD Conduct Rule 2310 and FINRA Rule 2010. For falsifying the client’s documents that led to inaccurate books and records Finlay violated NASD Conduct Rule 3110 and FINRA Rule 2010.
For his alleged violations, Finlay was ordered to pay a fine of $15,000, pay disgorgement in the amount of $6,639.23 and suspended from association with any FINRA member in any and all capacities for a period of 18 months.
Stockbrokers have been known to engage in many types of practices which violate industry and firm rules, practices, and procedures. In order to protect customers from stockbroker misconduct, FINRA rules require broker-dealers Cadaret Grant 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 firm, such as Cadaret Grant own policies and procedures. If broker dealers and/or their supervisors do not establish and implement these protective measures, they may be liable to investors for damages which flow from the misconduct. As a result, investors who have suffered losses because of their stockbroker’s unlawful or prohibited conduct can file a claim to recover damages against broker dealers like Cadaret Grant, which should consistently oversee its employees in order to prevent stockbroker misconduct.
Have you suffered losses in your Cadaret Grant investment account due to your stockbroker’s misconduct? 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 stockbrokers for unsuitable recommendations, misrepresentations, and/or other unauthorized and prohibited conduct.
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 40 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 post a comment, call (800) 732-2889, send Mr. Pearce an email at firstname.lastname@example.org, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.