Both investors and brokers have certain responsibilities when working with one another. However, since it is often presumed that New York brokers have more knowledge and experience when it comes to investing, some investors might blame brokers when things do not go as they wish. Since this could result in a professional being accused of broker misconduct, it is important to understand the responsibilities of both parties.
The Financial Industry Regulatory Authority (FINRA) proposed a new rule earlier this month to restrict the actions of investment firms with a problematic history. Open for comment until July 1, Rule 4111's "Restricted Firm Obligations" aims to protect investors from activities by rogue brokers and firms that turn a blind eye to supervising them.
Brokers who sell investments based on false information may very well find themselves facing sanctions by the SEC. That's what happened in the case of Lorenzo v. SEC. In this case, a broker was accused of sending potential investors emails that contained false information to solicit investment in Waste2Energy Holdings, Inc.
Puerto Rican brokers have been in the news for failing to ethically invest on their clients' behalf. Most recently, Investment News reported that two claimants were awarded $793,077.61 by UBS. They charged UBS Financial Services and UBS Financial Services of Puerto Rico with a number of investment violations after the clients purchased municipal bonds with them. These violations include: misrepresentation, negligence, failure to uphold their fiduciary duty and a several other ethical problems. What can you do if you suspect that your broker is not acting in your best interests?
You trusted a broker to manage a portion of your money, hoping to increase your savings before retirement. However, something does not seem right. They lost a large portion of your investment, but they did not give you a satisfactory answer as to why. It may be time to take a deeper dive into your investments, and make sure that everything is in order.
Broker misconduct is a major problem and a risk for investors who put their hard-earned money into the trust of financial advisors who are supposed to protect their wealth. In 2016, United States Senators Elizabeth Warren (D-Mass.) and Tom Cotton (R.-Ark.) wrote a letter to the financial industry regulatory authority (FINRA) requesting information about what the agency was doing to address adviser misconduct, recidivism and firms that employ a notably large number of brokers with a history of misconduct.
The Financial Industry Regulatory Authority (FINRA) has reported an $18.5 million record security arbitration decision against UBS Financial Services to clients who invested in Puerto Rico closed-end municipal bond funds. The clients were represented by the prominent securities and investor rights attorney Timothy J. Dennin.