Edward McFarlane, a registered representative formerly employed with Oppenheimer & Co. Oppenheimer), submitted a Letter of Acceptance, Waiver, and Consent (AWC), in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he recommended and effected unsuitable ETF recommendations in his customer’s account, resulting in losses to his customer of approximately $48,524.79.
Edward Thomas McFarlane, of Glenside, Pennsylvania, allegedly recommended and effected approximately 169 transactions involving inverse, leveraged, and inverse-leveraged exchange-traded funds (ETFs). FINRA found that Mr. McFarlane recommended that the non-traditional ETFs be held in his customer’s account for as long as 470 days, with an average holding time of 40 days. The ETFs recommended by Mr. McFarlane were intended to be short-term trading vehicles and not meant to be long-term investments.
Edward McFarlane was assessed a fine of $5,000 and suspended from association with any FINRA member for two months. The suspension is in effect from July 19, 2017 through August 18, 2017. Mr. McFarlane’s member firm paid restitution to the affected customer for the losses.
Under FINRA Rule 2111, the “Suitability Rule,” brokerage firms and financial professionals have the responsibility to make suitable recommendations to investors. This rule lays out the three main suitability obligations requiring brokers to (i) perform due diligence to understand the risks of an investment or investment strategy, and determine whether it is suitable for anyone, (ii) have a reasonable basis for believing the investment or investment strategy is suitable for the customer based on that customer’s investment profile; and (iii) have a reasonable basis for believing that a series of securities transactions are not excessive (if the broker has control over the account).
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, unsuitable trades and/or other misconduct by their broker can bring forth claims to recover damages against broker-dealers, like Oppenheimer & Co., which should consistently oversee its brokers’ activities in order to prevent the above-described prohibited conduct.
Have you suffered losses in an unsuitable ETF or other risky investment? Have you suffered losses in your Oppenheimer & Co. or any other brokerage account due to unsuitable recommendations made by 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 Oppenheimer & Co. 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 email@example.com for answers to any of your questions about this blog post and/or any related matter.