In a recent development, customers have alleged that Richard Hubert Depalma, a registered representative associated with Centaurus Financial, Inc. (CRD 30833) in Pennsylvania, recommended and misrepresented unsuitable, high-risk, and speculative investments, breaching his fiduciary duty. The allegations, filed on February 13, 2024, are currently pending resolution. While no specific dates for the alleged activity were identified in the Statement of Claim, the customers are seeking damages related to debt and corporate products.
Richard Hubert Depalma, who has been registered with Centaurus Financial, Inc. as a broker and investment advisor since October 31, 2007, vehemently denies any wrongdoing. He asserts that the allegations are completely without merit and maintains that the investments in question were suitable and recommended based on the customers’ objectives, goals, and financial circumstances. Depalma further states that the investments were offered only after the customers reviewed all material documentation related to the investment and confirmed in writing that they not only received the requisite investment documentation and disclosures but also fully understood the characteristics and risks involved.
According to Depalma‘s comment on the disclosure, he emphasizes that he put the customers’ interests first at all times and intends to vigorously defend this matter to the fullest extent of the law. The pending customer dispute is disclosed on his FINRA BrokerCheck report, which is publicly available.
Understanding the Allegations and FINRA Rules
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The allegations against Richard Hubert Depalma center around the recommendation of unsuitable investments and misrepresentation. In simple terms, suitability refers to the obligation of financial advisors to recommend investments that align with their clients’ financial goals, risk tolerance, and overall financial situation. Misrepresentation involves providing false or misleading information about an investment or failing to disclose material facts.
FINRA Rule 2111, known as the “Suitability Rule,” requires that financial advisors have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer, based on the customer’s investment profile. This profile includes factors such as age, financial situation, investment objectives, and risk tolerance.
Additionally, FINRA Rule 2020 prohibits financial advisors from engaging in manipulative, deceptive, or fraudulent practices, which includes misrepresenting or omitting material facts about an investment. Investment fraud and bad advice from financial advisors can have devastating consequences for investors, leading to significant financial losses and shattered trust.
The Importance for Investors
This case highlights the critical importance of working with trustworthy and ethical financial advisors who prioritize their clients’ best interests. Unsuitable investment recommendations and misrepresentations can lead to significant financial losses for investors, jeopardizing their financial security and long-term goals.
Investors should always be vigilant and thoroughly research their financial advisors before entrusting them with their hard-earned money. Reviewing an advisor’s FINRA BrokerCheck report, which discloses any pending or resolved disputes, regulatory actions, or other disclosures, is an essential step in the due diligence process.
Moreover, investors should maintain open communication with their advisors, asking questions and seeking clarification on any recommended investments or strategies. It is crucial to understand the risks, characteristics, and suitability of any investment before making a decision.
Red Flags and Recovering Losses
Investors should be aware of potential red flags that may indicate financial advisor malpractice or misconduct. Some warning signs include:
- Recommending investments that seem too good to be true or promise guaranteed returns
- Pressuring clients to make quick investment decisions without providing adequate information or time for due diligence
- Failing to provide clear explanations of investment risks and characteristics
- Recommending investments that do not align with the client’s stated goals, risk tolerance, or financial situation
If an investor believes they have suffered losses due to unsuitable investment recommendations or misrepresentations by their financial advisor, they may be able to recover damages through FINRA arbitration. This process allows investors to seek compensation for losses caused by broker misconduct or negligence.
Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating Richard Hubert Depalma and Centaurus Financial, Inc. They offer free consultations to clients who may have been affected by this alleged misconduct.
With over 50 years of combined experience and a 98% success rate, Haselkorn & Thibaut has a proven track record of helping investors recover losses through FINRA arbitration. They operate on a contingency basis, meaning there are no fees unless a recovery is obtained.
Investors who believe they may have been victims of financial advisor misconduct are encouraged to contact Haselkorn & Thibaut at 1-888-885-7162 for a free consultation.
