Eric Ruthman, a broker and investment advisor currently associated with Purshe Kaplan Sterling Investments (CRD 35747) in Georgia, is facing allegations of recommending unsuitable investments in structured products to clients between December 2020 and November 2021. The pending customer dispute, filed on January 24, 2024, is currently under FINRA arbitration.
According to the disclosure on Ruthman’s FINRA BrokerCheck profile (CRD #6281076), the claimants allege that the representative recommended unsuitable structured product investments during the specified time period. Ruthman and his firm, Purshe Kaplan Sterling Investments, deny any wrongdoing and maintain that the claim is unfounded and without merit.
The investment fraud law firm of Haselkorn & Thibaut is currently investigating Eric Ruthman and Purshe Kaplan Sterling Investments in connection with these allegations. Investors who have suffered losses due to unsuitable investment recommendations by Ruthman or his firm are encouraged to contact Haselkorn & Thibaut for a free consultation by calling 1-888-885-7162 .
Understanding Structured Products and FINRA Rules
Table of Contents
Structured products are complex investment vehicles that typically combine a debt security with a derivative component, such as options or futures contracts. These products can offer customized exposure to various asset classes, indices, or market sectors, but they also come with significant risks that may not be suitable for all investors.
FINRA Rule 2111, known as the “Suitability Rule,” requires brokers and investment advisors to 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, risk tolerance, and investment experience.
Additionally, FINRA Rule 2210 governs communications with the public, ensuring that broker-dealers and their registered representatives present fair and balanced information about investment products, including structured products. All communications must be based on principles of fair dealing and good faith, and must provide a sound basis for evaluating the facts concerning any particular security or investment strategy.
The Importance of Suitability for Investors
Unsuitable investment recommendations can have severe consequences for investors, leading to substantial financial losses and emotional distress. When brokers or investment advisors fail to properly assess their clients’ risk tolerance, investment objectives, and financial situation, they may recommend products that are inconsistent with the investor’s best interests.
Structured products, in particular, can be challenging for investors to understand due to their complex nature and potential risks. These risks may include credit risk, principal risk, liquidity risk, market risk, and reverse convertible or exchangeable risk. Investors must be fully informed about these risks and have a clear understanding of how the products function before investing.
By holding financial professionals accountable for unsuitable investment recommendations, FINRA aims to protect investors and maintain the integrity of the securities industry. Investors who have suffered losses due to unsuitable recommendations may be entitled to recover damages through FINRA arbitration.
Investment fraud and bad advice from financial advisors can have devastating consequences for investors. According to a Bloomberg article, the U.S. Securities and Exchange Commission (SEC) charged five individuals for allegedly promoting a $1 billion Ponzi scheme, highlighting the importance of being cautious when working with financial professionals and thoroughly researching investment opportunities.
Recognizing Red Flags and Seeking Help
Investors should be aware of potential red flags that may indicate financial advisor malpractice or unsuitable investment recommendations. These red flags may include:
- Recommendations that seem inconsistent with the investor’s risk tolerance or investment objectives
- Inadequate explanation of the risks and potential downsides of an investment product
- Pressure to make quick investment decisions or to invest a significant portion of assets in a single product
- Promises of guaranteed returns or unrealistic performance expectations
If an investor suspects that they have been the victim of unsuitable investment recommendations, it is crucial to seek the help of an experienced investment fraud law firm. Haselkorn & Thibaut, with offices in Florida, New York, North Carolina, Arizona, and Texas, has over 50 years of combined experience in representing investors in FINRA arbitration cases.
With an impressive 98% success rate, Haselkorn & Thibaut has a proven track record of helping investors recover their losses. The firm operates on a contingency basis, meaning that clients pay no fees unless a recovery is obtained. Investors can contact Haselkorn & Thibaut for a free consultation by calling their toll-free number, 1-888-885-7162 .
As the case against Eric Ruthman and Purshe Kaplan Sterling Investments unfolds, it serves as a reminder of the importance of working with financial professionals who prioritize their clients’ best interests and adhere to FINRA’s suitability and communication rules. By staying informed and vigilant, investors can protect themselves from unsuitable investment recommendations and seek recourse when necessary.
