David Francis Dalton of Chestnut Hill, Massachusetts submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined and suspended for allegedly exercising discretion and causing his firm to create and maintain inaccurate books and records in violation of NASD Rules 2510(b) and 3110 and FINRA Rules 4511 and 2010.
In February 2002, David Francis Dalton joined Moors & Cabot as a General Securities Representative. According to the FINRA findings, Dalton exercised discretion 221 times in his firm’s customer accounts without first obtaining written approval. The findings stated that when Dalton transmitted the order information for those trades, he allegedly failed to disclose that he used his discretion, causing the firm to create and maintain inaccurate order memoranda. In addition to the FINRA findings, Dalton allegedly made false statements regarding his exercise of discretion for the transactions on three of his annual compliance questionnaires.
NASD Rule 2510(b) prohibits registered representatives from exercising discretionary trading authority in a customer’s account unless the customer has provided prior written authorization and the account has been accepted in writing as a discretionary account by the registered representative’s member-firm employer. A violation of NASD Rule 2510(b) is also a violation of FINRA Rule 2010, which requires associated persons to observe “high standards of commercial honor and just and equitable principles of trade.” NASD Rule 3110 and FINRA Rule 45111 require member firms to make and preserve books and records in conformity with Section 17(a) of the Exchange Act and Rule 17a-3 promulgated thereunder.
Without admitting or denying FINRA’s findings, David Francis Dalton was assessed a deferred fine of $7,500 and suspended from association with any FINRA member in all capacities for three months. The suspension was in effect from February 18, 2020 through May 17, 2020.
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 stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system. The implementation of these industry rules requires 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 unauthorized trading, and/or other misconduct by their broker can file claims to recover damages against broker-dealers, like Moors & Cabot, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your Moors & Cabot account due to unauthorized trading by your broker? Was David Francis Dalton your stockbroker? 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 Moors & Cabot 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 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 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.