Florida Broker Fined, Suspended for Improperly Exercising Trading Discretion in Customer Account
Felipe Henao Vargas (CRD #5140431) is a previously registered broker and registered investment adviser (RIA). From January 2016 to February of 2022, Mr. Vargas was a registered representative of Insigneo Securities LLC in Miami, Florida. In December of 2023, the Financial Industry Regulatory Authority (FINRA) fined and suspended Felipe Henao Vargas for exercising trading discretion without written authorization. Within this article, our Miami unauthorized trading attorney discusses the allegations raised against and the sanctions imposed against this broker.
Suspended Broker: Felipe Henao Vargas, Formerly of Insigneo Securities LLC
The underlying matter in this case relates back to a customer complaint that was filed against Mr. Henao Vargas and his brokerage firm Insigneo Securities LLC in 2020. A client filed a complaint on the grounds that it was dissatisfied with the performance of its brokerage account and this broker. Specifically, the matter relates to a short trade that Mr. Henao Vargas placed in February of 2020. 20,000 shares of Barclays VIX short term futures were traded within a customer’s account. Later, another trade was made to cover the short. The customer sustained significant financial losses and, eventually, took the firm to FINRA arbitration. BrokerCheck states that the matter was settled for a little less than $1.1 million.
FINRA eventually launched an inquiry into the conduct of broker Felipe Henao Vargas. On December 19th, 2023, FINRA announced that Mr. Henao Vargas was being suspended for 45 days and fined $7,500 for violations of securities industry regulations. Specifically, FINRA determined that Mr. Henao Vargas exercised trading discretion in a non-discretionary brokerage account without obtaining the required written authorization from the customer. The enforcement action relates to the 2020 short trade incident involving Barclay’s VIX futures. As part of its enforcement action, FINRA also noted that this broker aggravated the misconduct by using an unapproved method of communication to discuss the matter with a family member of the customer.
An Overview of FINRA Rules: Discretionary vs. Non-Discretionary Accounts
FINRA has strict rules and regulations in place regarding broker trading discretion. Discretionary accounts grant brokers the authority to make investment decisions—such as the buying or selling of securities—without getting the client’s prior approval for each transaction. On the other hand, non-discretionary accounts require the broker to obtain explicit approval from the client before executing any trades. Failure to do so is a form of unauthorized trading even if the broker believes that his or her client would have likely granted approval for the specific transaction. FINRA has strict record-keeping requirements. The proper paperwork must be in place for a broker to exercise discretion within a customer’s account.
Contact Our Miami, FL Unauthorized Trading Lawyer Today
At Carlson & Associates, P.A., our Florida broker negligence lawyer has the knowledge, skills, and experience to handle unauthorized trading claims, including cases involving financial advisors exercising discretion in a non-discretionary trading account. Suffer investment losses? We can help. Contact us at our Miami law office for your confidential initial consultation.
Source:
brokercheck.finra.org/individual/summary/5140431