FINRA Arbitration Panel In Florida Holds Broker Liable For $62,000 In Investor Damages

Karl Ronald Foust (CRD#: 1010291) is a previously registered broker and previously registered investment adviser (RIA). Mr. Foust was most recently associated with H.D. Vest Investment Services at a branch office in Boca Raton, Florida (2009 to 2014). On April 19th, 2022, a FINRA Arbitration panel in Florida held Mr. Foust liable for $62,000 in investor damages (Case Number: 18-02332). In this article, you will find a more comprehensive explanation of the allegations and the decision of the FINRA arbitration panel.

Customer Complaint: Unsuitable Investment Recommendations, Broker Negligence 

The FINRA arbitration claim was initiated by Donna Berg on behalf of her Individual Retirement

Account (IRA). Securities broker Karl R. Foust and his former member firm (H.D. Vest Investment Services) were both named as respondents. The investor raised a number of specific allegations in her Statement of Claim, including:

• Unsuitable investment losses;
• Broker negligence; and
• Failure to properly supervise an investment advisor.

The underlying cause of action in this case is related to unregistered, illiquid, and now largely worthless investments. Upon review, the FINRA arbitration panel determined that H.D. Vest Investment Services was not responsible for the investor’s damages. However, the FINRA arbitration panel found Mr. Foust legally liable for $62,000 in investor losses.

Brokers Must Make Suitable Investment Recommendations 

The suitability rule is one of the most important regulations in the securities industry. Financial advisors have a professional responsibility to make suitable investment recommendations to their customers. Under FINRA Rule 2111, financial advisors must ensure that all investment guidance is reasonably suitable for an individual investor’s financial position, risk tolerance, and objectives. A broker or brokerage firm may be liable for losses sustained due to unsuitable investment guidance. 

Prior Investor Complaints Against Former H.D. Vest Broker Karl R. Foust 

Since July of 2017, former H.D. Vest broker Karl Foust has faced eight other customer complaints. All of the claims involved allegations of unsuitable investment recommendations. Five of those customer complaints were settled and two resulted in FINRA arbitration awards. Here is an overview of the recent history of this South Florida broker:

• October 2017: Investor complaint settled for $105,000 in compensation.
• March 2018: Investor complaint settled for $20,000 in compensation.
• July 2018: FINRA Arbitration Award for $100,000 in compensation.
• January 2019: FINRA Arbitration Award for $200,000 in compensation.
• April 2019: Investor complaint settled for $50,000 in compensation.
• February 2020: Investor complaint settled for $18,000 in compensation.
• July 2020: Investor complaint settled for $18,000 in compensation. 

Consult With an Unsuitable Investment Losses Attorney in Miami, Florida

At ​Carlson & Associates, P.A., our Miami investment fraud lawyers are dedicated to protecting the financial interests of investors. If you or your loved one lost money because your financial advisor made unsuitable investment recommendations, we can help. Give us a call now or connect with us through our website to arrange a fully confidential initial legal consultation.

Resources:

finra.org/sites/default/files/aao_documents/18-02332.pdf

brokercheck.finra.org/individual/summary/1010291