Investors are often confronted with complex financial scenarios that require a deep understanding of legal and financial principles. One such scenario involves allegations of financial malpractice against financial advisors. In this article, we will be discussing a specific case involving a financial advisor, Michael Persinski, and his association with CITIGROUP GLOBAL MARKETS INC and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (CRD 7691).
Understanding the Seriousness of the Allegation
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The case at hand involves a pending customer dispute filed on 8/24/2023 with a claim amount of a staggering $56,000,000. The claimants allege Michael Persinski of breach of fiduciary duty, negligence, fraud, breach of contract, third party beneficiary breach of contract, violation of Regulation BI, and negligent supervision. The allegations are related to an alleged failure to provide advice on a concentrated position and an alleged recommendation to use a line of credit to further concentrate their assets.
Such allegations are serious as they point towards potential financial malpractice. The advisor’s alleged actions could have resulted in significant financial losses for the investors. It also raises questions about the supervisory practices of the associated companies, CITIGROUP GLOBAL MARKETS INC and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED.
Decoding the Allegations and Understanding the FINRA Rule
The allegations against Michael Persinski involve complex legal and financial terms, but in simpler terms, the advisor is accused of not acting in the best interest of his clients and providing advice that led to the concentration of their assets. Concentration of assets can increase the risk of substantial loss if the particular asset class or sector does not perform well.
The allegations also mention a violation of Regulation BI. This refers to the Regulation Best Interest rule by the Financial Industry Regulatory Authority (FINRA), which requires brokers to act in the best interest of their clients and avoid conflicts of interest. A violation of this rule implies that the advisor may have put his own interests above those of his clients.
The Importance of these Allegations for Investors
Such allegations are of utmost importance to investors as they highlight potential risks associated with investment advisors. If proven true, these allegations could indicate a breach of trust and potentially significant financial losses.
Investors rely on their advisors to provide sound financial advice and to act in their best interest. Allegations of malpractice can shake this trust and make investors wary of their advisors. It also emphasizes the importance of regulatory bodies like FINRA and their role in protecting investor interests.
Spotting Red Flags and Recovering Losses
Investors should be vigilant and aware of potential red flags that could indicate financial advisor malpractice. These could include unexplained losses, aggressive selling tactics, or recommendations that don’t align with the investor’s financial goals.
In case of financial losses due to advisor malpractice, investors can recover their losses through FINRA Arbitration. The FINRA CRD number can be used to check the disciplinary history of a broker or investment advisor.
Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating the advisor and the company. With over 50 years of experience, successful financial recoveries for investors, and an impressive 98% success rate, they offer free consultations to clients. They can be reached at their toll-free consultation number 1-800-856-3352. Their “No Recovery, No Fee” policy ensures that clients are not charged unless they recover their losses.
