The seriousness of an allegation against a registered representative can have far-reaching implications, especially for investors. Recently, the U.S. Securities and Exchange Commission (SEC) has alleged that Michael Hamilton, a broker and investment advisor currently associated with Centaurus Financial, Inc. (CRD 30833), may have violated Rule 151-1(a) of the Securities Exchange Act of 1934, known as Regulation Best Interest. Specifically, he is accused of failing to comply with the Care Obligation under Rule 151-1(a)(2)(ii).
Understanding the Allegation and Its Impact
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Allegations of this nature are serious and can have significant implications for both the advisor and the investors involved. The Care Obligation stipulates that a broker-dealer must exercise reasonable diligence, care, and skill when making recommendations to a client. Failure to adhere to this rule can lead to financial loss for investors and severe penalties for the broker.
FINRA Rule and Its Implications
The Financial Industry Regulatory Authority (FINRA) oversees the conduct of brokerage firms and their associated persons. Rule 151-1(a) is a key regulation designed to protect investors from potential malpractice. It requires that brokers and advisors act in the best interest of their clients, avoiding conflicts of interest and providing full and fair disclosure of all material facts related to the recommended transaction or strategy.
Why This Allegation Matters to Investors
Investors rely on their financial advisors to act in their best interest and guide them towards sound investment decisions. Allegations of violating the Care Obligation, as in the case of Michael Hamilton, can erode this trust and potentially lead to significant financial losses.
Red Flags and Recovery of Losses
Investors should be vigilant for red flags that may indicate potential malpractice by their financial advisor. These can include frequent and unnecessary trading, over-concentration in a single investment, and failure to provide full and fair disclosure of risks.
Investors who suspect they may have suffered losses due to advisor malpractice can seek recourse through FINRA Arbitration. This process allows investors to resolve disputes with their brokers or brokerage firms. The national investment fraud law firm Haselkorn & Thibaut specializes in helping investors recover losses through FINRA Arbitration. With offices in Florida, New York, North Carolina, Arizona, and Texas, and over 50 years of experience, they have a proven track record of successful financial recoveries for investors.
Haselkorn & Thibaut is currently investigating the allegations against Michael Hamilton and Centaurus Financial, Inc. They offer free consultations and operate on a “No Recovery, No Fee” policy. Investors can reach them at their toll-free number, 1-800-856-3352.
Investors are encouraged to regularly review their account statements and question any transactions or strategies they do not fully understand. Additionally, investors can check the background of their financial advisor or firm through the FINRA BrokerCheck, which provides information about the broker’s regulatory, disciplinary, and arbitration history.
