Customers of barred broker or “financial advisor” Gabriel “Gabe” Block of Red Bank, New Jersey may have arbitration claims if Block caused the customers losses by recommending over-concentration of the customer’s accounts in stocks, excessive use of margin loans and/or trading in microcap stocks.
According to BrokerCheck records kept by the Financial Industry Regulatory Authority (FINRA), Block has been subject to at least 12 customer complaints and five regulatory actions during his career. Block is currently barred from the industry but was formerly employed by First Standard Financial Company LLC, National Securities Corp., and Oppenheimer & Company, among other brokerage firms. Several of the customer complaints against Block concern allegations of high frequency trading activity also referred to as churning.
On August 28, 2015, The State of Delaware’s Investor Protection Unit filed an administrative complaint against Block, with the following allegations: churning, excessive trading, unsuitable investment recommendations, and narcotics use. Block denied the Delaware allegations, but consented to a cease and desist order, and relinquished his right in the future to apply to be a broker or investment advisor in the state of Delaware.
According to publicly available documents, Block was the subject of a permanent bar by FINRA as of March 13, 2018. In barring Block, FINRA discussed Block’s history of alleged misconduct and legal claims involving customers dating back to the 1990s.
In May 2019 the New Jersey Bureau of Securities revoked Block’s license in his home state of New Jersey finding that Block engaged in dishonest or unethical business practices in the securities business. The state went on to find that Block engaged in a device, scheme, or artifice to defraud.
Also in 2019, Gray Firm filed a FINRA arbitration claim against Block’s former employer on behalf of a Block customer who alleges that she suffered substantial losses due to misconduct by Block, including excessive commissions and churning. Block was not named as a Respondent in the case.
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Oftentimes the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements
Among the many duties and responsibilities that brokers and brokerage firms owe to their clients are the duties to “conduct business with high standards of commercial honor” and “maintain just and equitable principles of trade” (FINRA Rule 2010). In addition, FINRA’s often discussed ‘suitability rule’ (FINRA Rule 2111) mandates, in part, that a broker and his or her employer must seek to ensure that the purchase of a recommended security is in keeping with the customer’s risk profile and stated investment objectives.
NASD Rule 3010 and FINRA Rule 3110 also require brokerage firms such as First Standard, Oppenheimer and National Securities Corp. to have a system in place to supervise the sales activities of their Registered Representatives. These industry rules require that each member ensure that transactions with customers are reviewed and in certain instances approved by a Supervisor/Principal of the member. Brokerage firms may be held liable by customers for failures to supervise that result in customer losses due to broker misconduct.
If you have invested with Gabe Block and have suffered losses, you may be able to recover your losses in FINRA arbitration. Investors may contact a lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or email@example.com for a no-cost, confidential consultation.