Investors have been left reeling after a serious allegation was made against a Registered Representative, William Burks, and his firm, Centaurus Financial, Inc. The customers claim that between August 2017 and February 2019, Burks recommended unsuitable, high-risk, and illiquid investments, and breached his fiduciary duty. The dispute, which is pending, is seeking damages of $580,000.
Understanding the Allegation
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The allegation against Burks and Centaurus Financial, Inc. is serious and has far-reaching implications for investors. The customers claim that Burks recommended unsuitable investments that were high-risk and illiquid, meaning they could not be easily sold or exchanged for cash without a substantial loss in value. This disregards the principles of suitability, a key concept in investment advising that requires advisors to recommend investments that align with the customer’s financial goals, risk tolerance, and financial circumstances.
Moreover, the customers allege that Burks breached his fiduciary duty. A fiduciary duty is a legal obligation to act in the best interests of another party. In this case, Burks allegedly failed to put his customers’ interests before his own, a serious misconduct in the financial services industry.
FINRA Rule Simplified
The Financial Industry Regulatory Authority (FINRA) is responsible for regulating and overseeing brokerage firms and their registered representatives. One of its key rules, FINRA Rule 2111, stipulates that a broker must have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer. This is based on the information obtained through reasonable diligence to ascertain the customer’s investment profile.
The allegations against Burks and Centaurus Financial, Inc. suggest a violation of this rule. If proven, this could result in penalties, including fines, suspension, or even expulsion from the industry.
Why It Matters for Investors
Such allegations are a stark reminder of the risks associated with investing, particularly when relying on the advice of financial advisors. Investors entrust advisors with their hard-earned money, expecting them to act in their best interests. However, when advisors fail to uphold their fiduciary duty or recommend unsuitable investments, it can lead to significant financial losses.
This case also highlights the importance of transparency and diligence in the financial services industry. Investors need to be fully aware of the risks associated with their investments, and advisors must provide all necessary documentation and disclosures.
Red Flags and Recovery of Losses
Investors should be vigilant for red flags that may indicate financial advisor malpractice. These include frequent buying and selling of securities (churning), unsolicited investment advice, and recommendations that don’t align with the investor’s financial goals or risk tolerance.
If investors suspect malpractice, they can seek to recover their losses through FINRA Arbitration. This is a dispute resolution process that is faster and less formal than court proceedings. It’s important to note that Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating this case. With over 50 years of experience and a 98% success rate, the firm offers free consultations to clients and operates on a “No Recovery, No Fee” policy. They can be contacted via their toll-free consultation number, 1-888-885-7162 .
Investors should always remember that they have rights and options when it comes to their investments. With the right guidance and support, they can navigate these challenging situations and work towards recovering their losses.
