Cetera Broker Suspended for Unsuitable Recommendation & Risky Trading Strategy

Richard Foster, a former registered representative with Cetera Investment Services LLC (Cetera) submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $10,000 by the Financial Industry Regulatory Authority (FINRA) for making an unsuitable recommendation that his customer liquidate his IRA to be utilized in a high-risk options trading strategy.

According to FINRA, Richard Charles Foster, of Tulsa, Oklahoma, recommended his customer place the entirety of his IRA assets into a high-risk, unsuitable options trading strategy.  Mr. Foster allegedly received authorization from his member firm to operate an income fund by falsely representing that the fund would not involve any customers.  However, Mr. Foster recommended his customer liquidate his IRA, worth $169,000 to invest in the income fund account.  The income fund account lost significant value due to trading losses and the commission costs connected with the high-volume ETF option trading strategy.  FINRA stated that once Mr. Foster’s customer learned he had incurred an $81,000 tax penalty because of the early IRA liquidation, he asked Mr. Foster to return what was left of his funds to pay the penalty. Mr. Foster returned $52,000 to the customer – a significant loss of the initial investment of $169,000.

Without admitting or denying FINRA’s findings, Mr. Foster was assessed a deferred fine of $10,000 and suspended from association with any FINRA member for six months.  The suspension is in effect from February 5, 2018 through August 4, 2018.

Stockbrokers have been known to engage in many practices that may be in violation of industry and firm rules, practices, and procedures.  In order to protect investors from stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system.  The implementation of these industry rules require supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures.  If broker-dealers and/or their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages which flow from the broker’s misconduct. Therefore, investors who have suffered losses stemming from unsuitable recommendations, unsuitable trade strategies and/or other misconduct by their broker can bring forth claims to recover damages against broker-dealers, like Cetera Investment Services, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.

Have you suffered losses in your Cetera Investment Services account due to unsuitable trades and/or unsuitable recommendations 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 Cetera Investment Services stockbrokers 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.