The Financial Industry Regulatory Authority (“FINRA”) recently sanctioned and barred stockbroker Matthew Davis due to allegations of misconduct while Davis was associated with Beneficial Investment Services, Inc. from November 2008, through April 2010. Davis was later employed by OneAmerica Securities, Inc. from April 2010, through July 2013.
FINRA’s charges allege that Davis misappropriate customer funds, misrepresented of customer holdings and account value, committed forgery, and engaged in discretionary unauthorized trading as well as unsuitable investment recommendations.
FINRA has additionally now alleged that OneAmerica failed to supervise Davis and ignored numerous red flags of misconduct concerning his activities. For examply, FINRA alleged that two customers opened a OneAmerica account with Davis identifying the husband as a 65 years-old and earning between $50,001-75,000 per year. His wife was a “Homemaker” and the couple’s stated Net Worth, excluding their residence, was “$250,001-500,000?” and they had only two years of investment experience limited to stocks, bonds, and mutual funds.
Despite the customers’ modest means and income, three weeks later the couple allegedly signed an Option Agreement and were approved to trade options. FINRA alleged that Davis rapidly traded the options account executing 55 options transactions in May 2012; 52 options transactions in June 2012; and 53 options transactions in July 2012. This activity, according to FINRA, caused a rapid loss of account equity. FINRA also alleged that there were multiple red flags that should have alerted the OneAmerica’s compliance department that Davis’ recommendations were unsuitable. For example, FINRA found that the couple’s account agreement reported minimal investing experience but their options agreement identified purported options (and commodities) trading experience.
FINRA also alleged that transactions made in the couple’s account were without any apparent rational anmd included rapid trading of stock and options. FINRA also alleged that these speculative transactions were inconsistent with the couple’s financial condition and needs.
FINRA found that OneAmerica’s supervisory procedures were insufficient to detect this activity and fined the firm $75,000.
If you have suffered significant losses as a result of your investments as a result of broker misconduct or inadequate supervision, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an attorney at Law Office of Christopher J. Gray at (866) 966-9598 or firstname.lastname@example.org for a no-cost, confidential consultation.