Investigators report that Lisa Lowi declined to provide the requested testimony. Under FINRA Rule 8210, registered brokers have a professional duty to fully cooperate with investigations, including submitting to on-the-record testimony when it is requested as part of a broader FINRA investigation into potential misconduct.

As a result of her failure to do so, Ms. Lowi has been permanently barred from associating with FINRA members in any capacity. Without admitting to or denying the alleged misconduct, Ms. Lowi consented to the sanctions. To get full information regarding this enforcement action, please refer to the FINRA Case Number: 2016048424901.

Allegations of Unsuitable Investments  

In recent years, Lisa J. Lowi was employed as a securities broker at RBC Capital Markets, LLC in West Palm Beach, Florida (2009-2015) and as a security broker at Janney Montgomery Scott LLC in Boca Raton, Florida. Over the last few years, many different investors have brought complaints against this broker. Indeed, on her FINRA BrokerCheck report, there are 35 different customer disputes that were filed in the three-year period from 2015 and 2017. As of January of 2018:

• 2 complaints have been withdrawn;
• 2 complaints were denied;
• 25 complaints were settled; and
• 6 complaints are still pending.

The vast majority of these customer complaints involve allegations of unsuitable investment recommendations. Most involve unsuitable corporate bond investment recommendations, with many of those corporate bonds being related to the energy sector. For the full available details regarding any specific complaint, investors should refer to BrokerCheck.

Victims of Unsuitable Investment Recommendations Should Take Legal Action

Brokers and brokerage firms have a legal responsibility to ensure that they are only recommending suitable investments for their customers. This is an affirmative duty, meaning that your broker must take proactive steps to ensure compliance. In practice, your financial advisor should carefully analyze your specific investment goals and your financial situation in order to determine which financial products and investment strategies are most appropriate for your individual needs. If you sustained serious losses because your advisor pushed you into unsuitably risky investments, you may be entitled to financial compensation. Your case should be review by a qualified legal professional.

Contact Our Miami Unsuitable Investments Lawyers Today

At Carlson & Associates, P.A., our law firm is committed to fighting for the rights and interests of investors. We have helped many unsuitable investment victims recover full and fair compensation for their losses. To get a confidential review of your broker negligence, please contact our legal team today. From our office in Miami, we serve investors throughout South Florida, including in West Palm Beach, Jupiter, Boca Raton, Fort Lauderdale, Hialeah, and North Miami Beach.

Resources:

brokercheck.finra.org/individual/summary/1347790

finra.complinet.com/en/display/display.html?rbid=2403&element_id=3883

finra.org/sites/default/files/fda_documents/2016048424901%20Lisa%20J.%20Lowi%20CRD%201347790%20AWC%20jm.pdf%20REDACTED.pdf

According to investigators, Mr. Hushek failed to adequately supervise a representative who was recommending unsuitable investments to clients. Full information regarding this case can be found by using FINRA’s Disciplinary Actions Online tool and referencing case number: 2013035817702.

The Allegations Against Daniel Joseph Hushek III

Background 

At the time that the misconduct occurred, Daniel Joseph Hushek III was employed as a general securities representative at G.F. Investment Services, LLC. While employed at this brokerage firm, Mr. Hushek was in a supervisory role. He had the professional responsibility to oversee the conduct of several different representatives, including a representative known in court documents as ‘RM’.

FINRA Regulations on Oversight  

FINRA Rule 3110 compels a brokerage firm to ensure that they have proper supervisory systems in place. This is a comprehensive requirement, designed to protect customers from negligence and intentional misconduct by individual brokers. The rule puts obligations on both member firms and the supervisory personnel who are employed at these firms. Specifically, supervisory personnel have a duty to investigate any and all red flags, and to take appropriate remedial action should any misconduct take place.

The Failure to Supervise Representative ‘RM’ 

The relevant time period in this case was from Spring of 2011 through the Summer of 2015. During this time, ‘RM’ was working as a securities representatives at G.F. Investment Services, LLC, under the oversight of Mr. Hushek. Investigators determined that RM recommended unsuitable trades to at least 41 different investors. These transactions all involved highly risky non-traditional exchange traded funds (ETFs). In all, the 41 investors sustained more than $2.4 million in losses due to the negligent recommendations of RM.

Failure to Properly Supervise the Broker  

Throughout the time period in which RM was recommending inappropriate non-traditional ETFs to firm clients, Mr. Hushek failed to take any action to correct the issue. In his role as a supervisor, he had a professional duty to uncover the misconduct, and then fix the problem. FINRA determined that there were clear red flags in this case. For example, RM was recommending that investors hold risky inverse ETFs for years at a time, despite the fact that these financial products were not supposed to be held for more than one day at a time. Further, RM was recommending these products to certain investors who had articulated that they wanted  ‘conservative’ investments. Beyond the 15-month suspension, Mr. Hushek was also fined $10,000 for his failure to protect the firm’s clients.

Did Your Broker Lose Your Money?  

Our law firm is here to assist you. At Carlson & Associates, P.A., our securities fraud lawyers fight for the rights of wronged investors. If you sustained losses due to your broker’s negligence, please call us today at 1-(305)-372-9700. We serve communities throughout Southern Florida, including Miami, Miami Beach, West Palm Beach and Fort Lauderdale.

Resources:

brokercheck.finra.org/individual/summary/4250117

disciplinaryactions.finra.org/Search/ViewDocument/69316

finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=11345

Without admitting to or denying any wrongdoing, Mr. Hickman, who is employed at Cetera Investments LLC, consented to the sanctions brought against him. According to FINRA’s Department of Enforcement, Mr. Hickman negligently recommended unsuitable investments to his clients.

The Allegations Against Registered Broker Christopher Robert Hickman 

The Background  

The relevant time period in this case ran from May 2011 until April of 2014. During that time, FINRA investigators believe that Mr. Hickman engaged in an unsuitable trading pattern within the accounts of six different clients. Specifically, investigators determined that Mr. Hickman purchased Unit Investment Trusts (UITS) for his clients, and then quickly flipped them in a pattern that made no sense as part of any broader investment strategy.

Most of the Recommended Financial Products Had a 24-Month Maturity Period  

A Unit Investment Trust is a financial product that offers investors access to a fixed portfolio that can be redeemed after a specified period of time. Most importantly, this type of investment is only appropriate for investors with certain financial needs. When purchased, UITs should generally be held until their maturity date has passed. Yet, despite the fact that these UITs had a two-year maturation period, Mr. Hickman recommended that his clients sell them in less than four months, on average. Worse yet, in many cases, Mr. Hickman then advised his clients to invest the proceeds from their sale in other similar Unit Investment Trusts, with nearly identical investment objectives.

Investors Were Paying Large Fees for No Benefit 

The UITs that Mr. Hickman was recommending to his customers came with large sales charges. In some cases, the sales charges were as high as 3.95 percent. For an investor, any sales charge or other fees that are paid to their broker or any other party are essentially lost income. Investors want to avoid paying large fees, unless there is a very clear benefit that comes along with that type of cost. In this case, investors were receiving no such benefit; they were simply forking over sales charge fees, then being moved over to other UIT and paying an additional fee. The overall strategy was not in the best interests of the investors. In total, the six customers lost $115,989.75 due to the unsuitable investment recommendations by Mr. Hickman. Full restitution with interest has been ordered to be paid by FINRA’s Department of Enforcement.

Were You the Victim of Securities Fraud?  

We can help. At Carlson & Associates, P.A., our investor rights attorneys have extensive experience handling unsuitable investment claims. If you lost money due to your broker’s unsuitable investment recommendations, please contact us for immediate legal assistance. We represent wronged investors in Miami and throughout South Florida, including Broward County, Dade County  and Palm Beach County.

Resource:

brokercheck.finra.org/individual/summary/3267599

Misconduct By Florida Broker Scott Allen Sibley  

The Background 

The relevant time period in the case begins in January of 2010 and stretches through February of 2015. During that time, Scott Allen Sibley was employed as a general securities representative at a Fort Lauderdale, FL branch of Raymond James & Associates. Eventually, Mr. Sibley was terminated from that brokerage firm in March of 2015 after the company had received several different customer complaints regarding Mr. Sibley’s professional conduct and management of their accounts.

Unauthorized Trading 

In 2009, a Florida investor, referred to only in the court documents as “KS”, transferred his account over to Raymond James & Associates. At the time, Scott Allen Sibley became the representative in charge of overseeing his investments. Notably, KS was a retired investor who had considerable medical issues. He had limited investment experience, and had a profile that allowed for a low to moderate risk tolerance. His account was not a discretionary trading account. Yet, between 2010 and 2015, Mr. Sibley made at least 900 securities transactions on the account without the approval, knowledge or consent of KS. Mr. Sibley’s actions caused tremendous financial damage to the value of this investor’s account. Indeed, between 2010 and 2015, KS’s account lost 50 percent of its total value, while the S&P 500 went up by more than 50 percent during that same time period.

Unsuitable Investments  

FINRA Rule 2111 requires that all registered investment advisors have a reasonable basis for believing that a particular investment opportunity is suitable for their client. Suitability must be present in all investment recommendations and trades. Unfortunately, Mr. Sibley repeatedly failed to live up to this professional obligation. At least ten different customer accounts were affected, including that of investor KS, who was also the victim of the unauthorized trading. The ten accounts in question were all owned by senior citizens of upper middle income status. As such, they were interested in relatively low risk investments. Yet, Mr. Sibley encouraged them to heavily concentrate their holdings in precious metals securities. This is a highly risky investment. Indeed, precious metal securities are speculative, volatile and are simply not appropriate for most investors. Certainly, they were not suitable for Mr. Sibley’s clients at Raymond James & Associates.

Contact Our Miami Investment Fraud Lawyers Today 

At Carlson & Associates, P.A., our Miami securities fraud lawyers have extensive experience handling unauthorized trading claims and unsuitable investment cases. If you were a victim of either of these violations or any other type of investment fraud in Florida, we can help. Please do not hesitate to contact our team today at 1-(305)-372-9700 to schedule your fully confidential initial claim evaluation.

Resources:

brokercheck.finra.org/individual/summary/1523981

finra.org/industry/faq-finra-rule-2111-suitability-faq

• Public censure;
• Fines totaling $210,000; and
• An order to give affected customers the option to ‘rescind’ all implicated transactions.

Full details regarding these proceedings can be found by referencing FINRA case #2015043950501.

Understanding the Misconduct by FMSbonds, Inc.

The Violative Conduct

FINRA’s Department of Market Regulation reviewed all of FMSbonds’ transactions from August 1st, 2013 through December 31st, 2015. During this review, officials determined that the brokerage firm had repeatedly violated MSRB Rule G-15. This rule strictly prohibits registered brokers and brokerage firms from selling their customers municipal securities in any amount that is lower than the minimum denomination. In all, the investigators determined that FMSbonds conducted at least 170 transactions that were in direct violation of this rule.

Why the Minimum Denomination Matters

For investors, the minimum denomination of municipal securities matters a great deal. This is true for two main reasons.

• Liquidity: First, if you are improperly sold municipal securities in an amount that is below the required minimum denomination, then you will be subject to many resale restrictions. This could seriously hamper the liquidity of your position. Being stuck in an illiquid position is inherently risky and undesirable, especially for retail investors.
• Suitability: Further, in many cases, minimum denominations are set by issuers because they have concerns about the suitability of the investment for retail buyers. If you purchase municipal securities in an amount that is below the minimum required denomination, you are likely holding an asset that is unsuitable for your investment profile.

Investor Remedies: Rescission Explained

In this case, beyond censure and fines, FMSbonds was also ordered to offer all affected customers the right to rescind their purchases. This type of remedy is offered in some investment fraud/negligence cases. Essentially, it lets customers reverse any trades they made that were impacted by their financial broker’s misconduct. Generally, when rescission is ordered, the brokerage firms will need to offer to reverse all violating transactions at either the original purchase price, or the current fair market price, whichever one happens to be higher. This is an important tool, as it stops the firm from being able to get any type of financial benefit as a result of their improper actions.

Were You a Victim of Securities Fraud?

The experienced Miami investment fraud attorneys at Carlson & Associates, P.A. can help. If your broker or brokerage firm caused you substantial losses, please call us today at 1-(305)-372-9700 to set up a fully confidential review of your claim. We serve wronged investors throughout South Florida, including Miami, West Palm Beach, Coral Gables, Fort Lauderdale, and Boca Raton.

Resources:

brokercheck.finra.org/firm/summary/7793

disciplinaryactions.finra.org/Search/ViewDocument/68132

msrb.org/Rules-and-Interpretations/MSRB-Rules/General/Rule-G-15.aspx

Quantitatively Unsuitable Investments

FINRA Rule 2111 requires investment advisers to have a reasonable basis of belief that any trades they make and any strategies they recommend are actually suitable for their clients’ individual investment objectives. This is not merely a passive obligation; brokers have an active duty to conduct proper due diligence to create an investment profile for their clients. In this case, investigators determined that Mr. Meehan failed to recommend suitable trades.

Indeed, the recommendations and investment strategies he offered for at least three different clients were found to be ‘quantitatively unsuitable’. Essentially, this means that his recommendations were inherently flawed. They would not have been suitable for any customers, no matter their needs. This is because his investment advice came with tremendous transaction costs that made it practically impossible for his clients to actually make a profit.

According to FINRA officials, one client had a cost-to-equity ratio that exceeded 175 percent. In other words, this client would have had to make investment gains of 175 percent over the course of a year just to break even. Needless to say, this investor sustained substantial losses by following Mr. Meehan’s recommendations.

Unauthorized Trading

Investment advisers are required to seek proper authorization from their clients before they execute any transaction. In some cases, clients open up ‘discretionary accounts’ with their brokers, which gives the financial professional the power to conduct individual trades without seeking specific authorization for each transaction. Other investors stick to ‘non-discretionary’ accounts; with these accounts, the broker must seek approval for every single trade. In this case, FINRA investigators found that Matthew Meehan conducted trades on customer accounts without receiving proper authorization. Several of Mr. Meehan’s clients had ‘non-discretionary’ accounts, yet he operated these accounts as if he had full discretion to make trades. This is a direct abuse of the trust that his clients put in him. Victims of unauthorized trading are entitled to recover compensation for the full value of their losses.

Were You the Victim of Securities Fraud?

Our attorneys can help. At Carlson & Associates, P.A., we have extensive experience handling a wide variety of investment fraud claims, including claims related to unsuitable investments and unauthorized trading. To schedule a fully confidential review your case, please do not hesitate to call our firm today at 1-(305)-372-9700. From our office in Miami, we represent investors throughout South Florida, including in West Palm Beach and Fort Lauderdale.

Resources:

brokercheck.finra.org/individual/summary/4320603

disciplinaryactions.finra.org/Search/ViewDocument/67128

finra.complinet.com/en/display/display_viewall.html?rbid=2403&element_id=9859&print=1

Additionally, this complaint also alleges that Mr. Zullo’s employer, LPL Financial, bears some responsibility for the misconduct. According to authorities, LPL Financial negligently failed to put a stop to Mr. Zullo’s bad actions. Part of the reason for this was because the brokerage firm had weak oversight in place. Recently, the Boston Business Journal reported that LPL Financial settled the case with authorities for $3.7 million.

Claims Against Financial Adviser Roger S. Zullo

The state of Massachusetts alleges that Roger S. Zullo, over a period of several years, sold clients highly unsuitable variable annuities. In all, he brought in nearly $2 million worth of commissions and fees for himself and his employer in association with these investments. The variable annuities sold by Mr. Zullo shared the three following characteristics:

• High complexity;
• Illiquidity; and
• High commissions.

While these sales certainly brought in large amounts of money for Mr. Zullo, they were bad investments for his customers. Indeed, in many cases, Mr. Zullo encouraged his customers to prematurely switch out of annuities that they already held and into these new investments. For many of his clients, this meant that they were struck with large and completely avoidable surrender charges.

Unsuitable Investments

Even worse, for the vast majority of his clients, many of whom were retired or late in their career and were of moderate income, these variable annuities were never appropriate investments in the first place. Mr. Zullo was selling them annuities that were only suitable for investors who were young and of high income. As the majority of his clients did not fit this investment profile, Mr. Zullo actively tampered with their financial documents in order to make it look like they did.

The Massachusetts Securities Division noted that in many cases, senior citizens were a target of his fraud. As an example, in one case, Mr. Zullo met with one of his clients, a retired former professional who was in his 80s and who had a cognitive impairment, and he encouraged this client to switch to a high-cost annuity. In order to get this transaction processed, Mr. Zullo had to actively alter this elderly customer’s financial records. He fraudulently decreased his age and increased his net worth. This type of elder financial fraud is especially heartbreaking and it remains far too common. Risky investments are simply not suitable for most senior citizen investors.

Did You Lose Money Because of Unsuitable Investment Recommendations?

Our Miami investment fraud attorneys can help. At Carlson & Associates, P.A., we have extensive experience handling unsuitable investment claims. To schedule a review of your claim, please call our team today at 1-(305)-372-9700. We represent securities fraud victims throughout Florida, including in Fort Lauderdale and West Palm Beach.

Resources:

sec.state.ma.us/sct/current/sctlplzullo/Administrative-Complaint-December-1-2016_Redacted.pdf

bizjournals.com/boston/news/2017/01/30/galvin-s-office-wins-3-7m-settlement-from-lpl-in.html

Etter’s Company Hard Sought Commission Payments

Financial advisers and broker-dealers have a legal duty to represent the best interests of their clients. Unfortunately, Alex Etter’s company, Etter Group Corporation (EGC), failed to live up to this obligation. As a result, his clients suffered serious financial losses. In 2011, EGC, a small firm, began to rapidly expand its client base. As part of its expansion, the company became a branch of Caldwell International Securities Corp. During this expansion, Etter brought aboard three new registered financial advisers. Each of these advisers joined the brokerage firm as an independent contractor. Additionally, each adviser was paid exclusively based on commissions related to the buying and selling of securities. Clearly, an incentive was established at the firm to increase trading within customer accounts. Specifically, EGC sought out customers who were willing to agree to mark that the ‘purpose’ of their trading account was ‘speculation’. As such, Alex Etter reasoned that every type of investment was suitable for these customers. Etter proceeded to recommend all of these customers an extremely active and experienced trading strategy.

Customer Account Value Was Being Eaten Away Through Active Trading

Of course, an active trading strategy results in more commissions for the firm. Even if an account is  designed for ‘speculation’ it does not mean that every possible trade in suitable for it. From the 2012 through 2014, customer accounts at EGC often purchased and sold multiple single securities within the same month, and sometimes even within the same week. Shockingly, EGC raked in commission payments as high as 4 or 5 percent on each individual transaction. This is a truly extreme figure which makes it nearly impossible for a customer account to turn a profit over the long-run. In essence, the firm was churning customer accounts. The net result of this activity was that customer accounts were slowly losing value while the firm continued to take in big time commission payments and profits. To put it in another perspective, FINRA investigators found many instances where EGC clients made a successful trade (one that made money) but their account actually lost value because the commission fee was higher than the total profit.

Contact a South Florida Investment Fraud Lawyer Today

If you have been the victim of investment fraud in the Miami area, the experienced attorneys at Carlson & Associates, P.A. are ready to help. Our firm has a proven track record of success and we are ready to fight hard to help you seek the full and fair compensation you rightfully deserve. Please do not hesitate to contact us today to request your fully confidential initial legal consultation.

Resource:

disciplinaryactions.finra.org/Search/ViewDocument/66718