Brooklyn New York Unsuitable Investment Recommendations Lawyer

Jul 1, 2016

J.P. Morgan Branch Fines Exceed $1 Million for Unsuitable Activity

J.P. Morgan Clearing Corp. (JPMCC) of Brooklyn, New York and J.P. Morgan Securities LLC (JPMS) of New York, New York submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for alleged unsuitable broker activity. The Suitability Rule (FINRA Rule 2011) is the most fundamental rule brokerage firms and associates must abide by in recommending investments to customers. Brokers must recommend appropriate investments given the customer’s objectives, financial condition, tax status, etc. 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 strategy is suitable for the particular 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). In the case of JPMCC and JPMS, FINRA found that JPMS failed to send letters to customer accounts confirming changes in their investment objectives.

Mar 7, 2016

Garden State Securities Broker Fined and Suspended by FINRA for Unsuitable Recommendations

Adam R. Tau, a former broker with the New York branch of Garden State Securities, Inc., submitted a letter of Acceptance, Waiver, and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he made unsuitable recommendations to a customer which resulted in substantial losses in the customer’s account. FINRA found that Adam Tau made recommendations to his customer that were unsuitable given his customer’s conservative investment objectives, risk tolerance, and limited assets and income. Mr. Tau recommended five purchases of common stock totaling approximately $204,000. During the relevant time period, the stock experienced several price declines which resulted in a loss of approximately $30,000. Additionally, FINRA found that Mr. Tau exercised discretion in his customer’s account by effecting ten trades without obtaining the necessary written authorization from his customer and neglecting to obtain the written acceptance of the account as discretionary by Garden State Securities.