Douglas Schmitz, a financial advisor associated with Aurora Securities (CRD 46147) and Classic, LLC (CRD 159357) in North Dakota, is currently facing serious allegations of misconduct. According to a pending customer dispute filed on February 12, 2024, a client has accused Schmitz of negligence, gross negligence, breach of fiduciary duty, breach of contract, fraud, negligent misrepresentations, negligent supervision, and violations of various state, SEC, and FINRA rules.
The client’s allegations specifically cite violations of 10-04-15 of the North Dakota Securities Act of 1951, Section 206(4) of and Rule 206(4)-7 under the Investment Advisers Act of 1940, FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade), FINRA Rule 2111 (Suitability), FINRA Rule 3010 (Supervision), and FINRA Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices). The dispute involves investments in leveraged ETFs, which are complex financial products that carry significant risks. Investopedia warns that leveraged ETFs are not suitable for long-term investing due to their inherent volatility and the compounding of daily returns.
As of the date of this article, the customer dispute remains pending, and the damage amount requested has not been disclosed. Haselkorn & Thibaut, a national investment fraud law firm, is currently investigating Douglas Schmitz and his affiliated firms, Aurora Securities and Classic, LLC, in connection with these allegations. Investors who have suffered losses due to Schmitz’s alleged misconduct are encouraged to contact Haselkorn & Thibaut for a free consultation by calling their toll-free number, 1-888-885-7162 .
Understanding the allegations and FINRA rules
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The allegations against Douglas Schmitz are severe and encompass a wide range of misconduct. Negligence and gross negligence refer to a failure to exercise reasonable care in managing client investments, while breach of fiduciary duty suggests that Schmitz may have put his own interests ahead of his clients’ interests. Breach of contract, fraud, and negligent misrepresentations imply that Schmitz may have made false or misleading statements to his clients or failed to fulfill his contractual obligations.
The alleged violations of FINRA rules are particularly concerning. FINRA Rule 2010 requires financial advisors to observe high standards of commercial honor and just and equitable principles of trade. FINRA Rule 2111, known as the “suitability rule,” obligates advisors to recommend investments that are suitable for their clients based on factors such as age, financial situation, and risk tolerance. FINRA Rule 3010 mandates that firms properly supervise their associated persons to ensure compliance with securities laws and regulations. Lastly, FINRA Rule 2020 prohibits the use of manipulative, deceptive, or fraudulent devices in connection with the purchase or sale of securities.
Violations of these rules can result in disciplinary action by FINRA, including fines, suspensions, or even permanent barring from the securities industry. Investors who have been harmed by such misconduct may be entitled to recover their losses through FINRA arbitration, a process in which a neutral third-party arbitrator hears arguments from both sides and renders a binding decision.
The impact on investors
The allegations against Douglas Schmitz highlight the potential risks investors face when working with financial advisors. Misconduct by advisors can lead to significant financial losses, as well as emotional distress and a loss of trust in the financial system. Investors who have suffered losses due to Schmitz’s alleged misconduct may face challenges in recovering their money, as the process of seeking compensation can be complex and time-consuming.
However, investors should not lose hope. By working with experienced investment fraud attorneys, such as those at Haselkorn & Thibaut, investors can improve their chances of recovering their losses. Haselkorn & Thibaut has a proven track record of success in representing investors in FINRA arbitration, with a 98% success rate and over 50 years of combined experience. The firm operates on a “No Recovery, No Fee” basis, meaning that clients only pay legal fees if a recovery is obtained.
Investors who have worked with Douglas Schmitz or his affiliated firms, Aurora Securities and Classic, LLC, should carefully review their investment accounts and statements for any suspicious activity or unexplained losses. If they suspect that they have been the victim of misconduct, they should contact Haselkorn & Thibaut immediately for a free consultation.
Protecting yourself from financial advisor misconduct
While the allegations against Douglas Schmitz are troubling, they also serve as a reminder of the importance of being vigilant when working with financial advisors. Investors can protect themselves by being aware of potential red flags, such as:
- Promises of guaranteed returns or low-risk investments with high yields
- Pressure to make quick investment decisions or to invest in complex products
- Lack of transparency about fees, commissions, or conflicts of interest
- Unauthorized trades or inconsistencies in account statements
- Failure to return phone calls or provide requested information
If investors notice any of these warning signs, they should not hesitate to ask questions, request additional information, or seek a second opinion from a trusted financial professional. They should also regularly review their account statements and promptly report any discrepancies or concerns to their advisor’s supervisor or compliance department.
The role of FINRA arbitration
When financial advisor misconduct does occur, FINRA arbitration provides a valuable avenue for investors to seek recovery of their losses. FINRA arbitration is a faster, more cost-effective alternative to traditional litigation, with cases typically resolved within 12 to 18 months. The process is also less formal than court proceedings, with relaxed rules of evidence and procedure.
To initiate a FINRA arbitration claim, investors must file a Statement of Claim with FINRA, outlining their allegations and the damages they are seeking. The advisor and their firm then have an opportunity to respond, and the parties can engage in discovery to gather evidence. Ultimately, the case is heard by a panel of one to three arbitrators, who render a binding decision.
Investors who are considering filing a FINRA arbitration claim should work with experienced investment fraud attorneys who can guide them through the process and advocate for their rights. Haselkorn & Thibaut, with offices in Florida, New York, North Carolina, Arizona, and Texas, is well-positioned to represent investors nationwide in FINRA arbitration claims against Douglas Schmitz and his affiliated firms.
As the investigation into Douglas Schmitz’s alleged misconduct continues, investors should remain vigilant and take steps to protect their financial interests. By working with skilled investment fraud attorneys and participating in FINRA arbitration when necessary, investors can hold unscrupulous advisors accountable and recover the losses they have suffered. If you have any concerns about your investments with Douglas Schmitz, Aurora Securities, or Classic, LLC, do not hesitate to contact Haselkorn & Thibaut for a free consultation at 1-888-885-7162 .
