The seriousness of allegations against financial advisors cannot be understated, especially when it pertains to the exploitation of elderly clients. A case in point is the recent regulatory action against Richard Siminou, a former representative of Newbridge Securities Corporation and KINGSWOOD CAPITAL PARTNERS, LLC (CRD 288898). The Financial Industry Regulatory Authority (FINRA) has taken severe disciplinary actions against Siminou for excessively and unsuitably trading two elderly customer accounts.
Allegation’s Seriousness and Case Information
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The findings of the case, as stated by FINRA, are disturbing. The annualized cost-to-equity ratio resulting from Siminou’s trading activities was over 29 percent and 34 percent, respectively, for the two elderly customer accounts. This inappropriate trading led to the customers paying a staggering $17,021 in commissions and fees.
Without admitting or denying the findings, Siminou consented to the sanctions and to the entry of findings against him. The sanctions levied against him include a civil and administrative penalty of $5,000, restitution of $17,021 to the affected customers, and a suspension in all capacities for four months, from September 18, 2023, to January 17, 2024. The seriousness of these sanctions underscores the gravity of the allegations against Siminou.
Explanation in Simple Terms and the FINRA Rule
The FINRA rule in question here is Rule 2111, which pertains to suitability. This rule mandates that a broker must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer. This is based on the information obtained through reasonable diligence to ascertain the customer’s investment profile. The rule is designed to protect investors from unscrupulous brokers who may engage in excessive trading to generate commissions.
In Siminou’s case, the high cost-to-equity ratio indicates that the trading was excessive and unsuitable for the clients’ investment profiles, leading to unnecessary costs for the clients. This is a clear violation of the FINRA Rule 2111.
Why it Matters for Investors
Investors, especially those who are elderly or less experienced, rely heavily on their financial advisors for investment decisions. When these advisors violate their duty of care, as in Siminou’s case, the financial consequences can be devastating. Such cases highlight the importance of investor vigilance and the need for robust regulatory oversight to protect investors from malpractice.
Investors who have suffered losses due to such malpractice can seek redress through FINRA arbitration, a dispute resolution process designed to help investors recover losses caused by broker misconduct. 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 and a commendable 98% success rate, they offer free consultations to clients and operate under a “No Recovery, No Fee” policy. Investors can reach them at their toll-free consultation number, 1-800-856-3352.
Red Flags for Financial Advisor Malpractice and How Investors Can Recover Losses
Investors should be aware of red flags that may indicate financial advisor malpractice. These include excessive trading, unsuitable investment recommendations, and high fees or commissions. If you notice these red flags, it is crucial to take swift action to protect your investments.
Investors who have suffered losses due to broker misconduct can seek compensation through the FINRA arbitration process. This process is more streamlined and cost-effective than traditional litigation and can help investors recover their losses. The FINRA CRD number can provide more information about the broker’s history.
Haselkorn & Thibaut specialize in representing investors in FINRA arbitration cases. Their team of experienced attorneys can guide you through the process and fight for your rights to ensure you receive the compensation you deserve.
