Florida Broker Fined And Suspended For Unsuitable Investment Recommendations
Phil Donahue (CRD#: 1206346) is a licensed securities broker and registered investment adviser (RIA). Currently, Mr. Donahue serves as a registered representative for Primerica Advisors and PFS Investment Inc. in Panama City Beach, Florida.
On August 10th, 2022, the Financial Industry Regulatory Authority (FINRA) fined and suspended Mr. Donahue for violation of FINRA Rule 2111—the rule against unsuitable investments. Here, our Miami unsuitable investment lawyer discusses sanctions against the broker.
Suspended Broker: Phil Donahue of Primerica Advisors and PFS Investment Inc.
According to FINRA’s Letter of Acceptance, Waiver, and Consent (NO. 2020068544901), the underlying allegations in this case occurred between January of 2016 and March of 2016. During that time, FINRA contends that PFS Investment Inc. broker Phil Donahue recommended that two customers invest an unsuitably high percentage of the total value of their portfolio into one energy sector security (a mutual fund). The mutual fund in question was not well-diversified—it was highly exposed to the energy sector of the economy.
The customers at issue were a married couple. FINRA notes that the information that they provided to PFS Investment Inc. indicates that they were interested in a “moderate growth” portfolio. The guidelines from PFS Investment Inc states that any customer who wants moderate growth should not be invested in any more than 17 percent of a specific sector of the market. A high concentration of investment in a single sector dramatically increases a portfolio’s risk. By 2020, the fund in question had lost more than half of its value and the customer sold their position for a large loss.
Broker Sanctions: Suspension, Fine, and Mandatory Training
FINRA took disciplinary action against the broker. Without admitting to or denying any of the allegations raised against him. PFS Investment Inc. representative Phil Donahue has consented to FINRA’s proposed sanctions. Specifically, these sanctions include:
- A 30 day suspension from the securities industry;
- A $2,500 fine; and
- 10 hours of trading on FINRA Rule 2111.
FINRA Rule 2111: Suitability
FINRA Rule 2111 is often referred to simply as the suitability rule. It is a securities industry regulation that holds that brokers and brokerage firms must have a “reasonable basis” to believe that their investment guidance is suitable for their specific customers. In other words, FINRA suitability requires brokers and brokerage firms to understand a customer’s risk tolerance and investment objectives and follow a strategy that is consistent with their goals. If a broker or brokerage firm violates the suitability rule, they can be held legally liable for a customer’s damages.
Set Up a Confidential Consultation With a Florida Unsuitable Trading Attorney
At Carlson & Associates, P.A., our Florida unsuitable investment lawyer has the professional skills and financial expertise to help you secure full and proper financial compensation for your investment losses. Give us a call now or connect online to arrange a confidential case evaluation with a Florida securities fraud lawyer. We handle unsuitable investment claims in Miami-Dade County and throughout the region.
Source:
finra.org/sites/default/files/fda_documents/202006854490%20Phil%20Donahue%20CRD%201206346%20AWC%20lp.pdf
