financial advisor misconduct

O Canada... Broker Misconduct Crosses the Border

Human nature transcends national boundaries. At least, that’s what a recent and very disturbing investigative report suggests about financial advisors in our genial neighbor to the north, Canada. While Canada may not have anywhere near the United States’ problems with violent crime or even crime in general, it appears to be equally burdened by financial fraud and broker misconduct.

The CBC or Canadian Broadcasting Corporation is the country’s oldest and most venerable broadcasting network. And its Marketplace division covers the financial markets for the network. Given that about a third of all Canadians use investment advisors to manage their money, CBC’s Marketplace reporters thought it would be interesting to find out just what kind of advice these advisors were dispensing to ordinary folks like us. So they sent journalists posing as customers into five large banks and five popular and investment firms wearing a hidden camera.

Well, guess what…?

The hidden camera revealed that the advice these so-called “advisors” were giving was nothing short of “atrocious.” For more, check out the entire mind-boggling, stomach-turning piece here.

If you think it’s just a Canada thing, think again. As the media and FINRA’s own monthly disciplinary action reports suggest, negligent investment advice, broker misconduct, and outright fraud and theft are closer to the rule than the exception in our great country. And while regulators at the SEC and FINRA are working hard to fight and rectify all forms of misconduct, the best means of prevention still lies with the individual investor: us. Check out the CBC’s helpful tips on how to check out your broker, and then check out our own tips for financial self-defense here.

If you or anyone you know has been the victim of broker misconduct or investment fraud, please contact us immediately for a free consultation at 1-855-462-3330 or via email by clicking here.

FINRA's Monthly Blacklist

We don't know about you, but seeing the unjust finally get their due always gives us a boost. hat's in part why we look forward to the release of FINRA's monthly "Disciplinary and Other FINRA Actions" report. This is just what it sounds like, a listing of all the sanctions, fines, suspensions, and other disciplinary actions that have handed down by FINRA against the iniquitous brokers, investment advisors, and brokerage firms who have dis-served or manipulated their customers in so many different ways. It's a long report, but what stood out to us is the recurring appearance of firms who have mishandled private placements in flagrant disregard for FINRA's warnings over the past few years that they would be cracking down on private placements (see 2010 and 2011 "Annual Regulatory and Examination Priorities Letters" as well as Regulatory Notice NTM 10-22 in April 2010.) FINRA was not kidding. Janco Partners, Lincoln Financial, Roth Capital Partners, and the Tidal Group--to name a few--have all suffered penalties as a result of failures to fulfill their obligations related to private placements. If you're not sure or need a refresher on what a private placement is, here's Wikipedia on the subject:

Preview of “Private placement - Wiki..., the free encyclopedia” copy.jpg

Also worth noting in the report is the fact that KMS Financial Services was punished for failing to do its due diligence before letting its broker-dealers sell shares in a dubious hedge fund. Bad on them. FINRA warned you! According to Regulatory Notice 10-22, if a firm knows about a private placement offering, they are required to conduct due diligence to make sure the private placement is suitable for its customers before investing. 

Finally, FINRA also provides listings for individual brokers who have been suspended. It's a long list (see page 17). If you've ever had it in the back of your mind that your broker-dealer ripped you off, why not see if he or she made the list... And then contact us. 

Granny Gets Taken

 A particularly distasteful case recently came to our attention that describes how a former Wells Fargo Broker defrauded an elderly widow out of $650,000. Despicable. And, unfortunately, all too frequent an occurrence...


The elderly are common targets for financial adviser misconduct, fraud, and all kinds of other injurious, unlawful behavior. One tip for elderly people (and for the younger generations who should be looking out for them) to prevent being taken advantage of would be to take the time each month to review your account statements. If there is anything fishy or even just difficult to understand in the statements, schedule a meeting with your financial adviser in order for him and her to explain everything in the statements.  If you have reason to suspect he or she is not being honest with you, begin to document these meetings and any other meetings you have with your adviser.  It is a helpful way to remember what you were told; and, if you ever end up in arbitration for any reason, you will have an incredibly effective tool for an attorney arguing your case. 

If you or anyone you know has been a victim of broker misconduct or securities fraud, please contact us for a free consultation.