NASD Rule 2310 known as the “Suitability Rule” provides that a stockbroker who recommends the purchase or sale of a security to have “reasonable grounds” for believing that the recommendation is suitable for the customer based on the facts disclosed by the customer relating to his investment objectives and financial situation and needs. Apparently, Mr. Bruno recommended an unsuitable closed-end bond fund for a customer who listed his investment objective as “preservation of capital” and his risk tolerance as “conservative.” The customer was retired and needed the monies deposited into his account within the next year and a half. By recommending the investment in a closed-end bond fund which was subject to volatility based on interest rates, the customer was exposed to unnecessary losses if he needed to liquidate the funds at a time when they had declined in value. This recommendation was inconsistent with the customer’s conservative risk tolerance and objective to preserve capital that he needed the next year.
Mr. Bruno did not only make unsuitable recommendations. According to FINRA, one of Mr. Bruno’s customers told him to discontinue trading in his account, in writing and over the telephone, but Mr. Bruno did not listen. FINRA claimed that Mr. Bruno went on to purchase another closed-end bond fund like the first with the same interest rate sensitivity which was inconsistent with the customer’s investment objectives. The unauthorized transaction was in violation of FINRA Rule 2010.
It appears that FINRA really became upset with Mr. Bruno when he settled the claims for unsuitable and unauthorized transactions with the customer and required the customer not to disclose or discuss the facts or any of the documents relating to his claims with anyone. FINRA has a rule that prohibits registered persons from preventing customers who settle disputes with them from talking about the claim or settlement with the regulator, understandably, because such confidentiality provisions impede FINRA’s ability to investigate misconduct by its registered persons.
Have you suffered losses in an unsuitable investment? Did your broker engage in unauthorized transactions in your account? Have you suffered losses in your account with Wall Street Money Center Corporation? Was Peter Bruno your investment advisor? 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 Mr. Bruno and other stockbrokers who may have engaged in 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 , 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.