Frank Avallone, a financial advisor at National Securities Corporation, is facing suitability questions after two customers accused him of recommending unsuitable investment products. According to BrokerCheck record of May 7, 2020, two customers have accused of recommending wrong investments that led to substantial losses. Investors are encouraged to call 1-800-856-3352 to review their investment portfolios for potential loss recovery.
Frank Avallone is a registered broker and Financial Advisor at Connecticut-based National Securities Corp. He has eleven years of experience in the securities industry and worked at Newbridge Securities Corp prior to joining National Securities. Other brokerage firms where Frank Avallone has worked are;
· Global Arena Capital Corporation
· First Midwest Securities
· Maxim Group
· Eastbrook Capital Group
Frank Avallone has passed the Series 7 – General Securities Representative Examination, the SIE – Securities Industry Essentials Examination, and the Series 63 – Uniform Securities Agent State Law Examination. He is registered in 37 US states and territories.
These are not the only suitability complaints that Frank Avallone is facing. According to records from the Financial Industry Regulatory Authority (FINRA), he faces four customer complaints, all alleging violation of sales practice. Of the six broker-dealers where Frank Avallone has served, two (Global Arena Capital and Eastbrook Capital Group ) have been expelled by FINRA.
What are Unsuitable investments?
An investment is termed unsuitable if it is not appropriate to the client based on his/her needs and objectives. A broker is required to recommend suitable investment products and/or strategies that are appropriate to minimize risk and guarantee high returns. This calls upon the advisor to conduct adequate research and due diligence to determine the projected returns and level of risk from each investment product or strategy.
The advisor’s recommendation should take into account key factors regarding the investor like financial resources, age, level of risk tolerance, and investing experience. Unsuitable investment recommendations are common and always put the investor in jeopardy as a result of huge financial losses.
As per FINRA guidelines, a brokerage firm is responsible for advising investors on suitable investment products and strategy and supervising their investment activities for the period they are registered with the firm. The firm is liable for any loss suffered for negligence or wrongful handling of investment by the broker-dealer. In this case, Avallone’s clients could file a claim against National Securities.
To attain a significant level of suitability, many brokerage firms or financial advisors take over control of the customer’s account to ensure all transactions conducted are in line with the customer’s investment needs. Parameters that are monitored in the customer’s account include the cost-equity ratio, the turnover rate, and the use of in-and-out trading. These parameters are the basis for determining if a member has violated suitability obligations.
There is customer-based suitability, which requires that all recommendations made are in line with the customer’s investment profile. Factors evaluated to determine customer-specific suitability include;
· Tax status
· Investment objective
· Financial status
· Risk tolerance
· Time horizon
Below are customer complaints that Avallone facing;
· In February 2020, a customer filed a complaint against Avallone seeking $140K in damages.
· Another client filed a complaint in 2019, seeking more than $209K.
In 2014, Avallone paid $6,100 in damages after a customer filed a complaint for violating FINRA regulations, recommending unsuitable investments, failing to supervise, and breaching contracts. In 2012, Avallone advised a customer that there would be no commissions charged on equity purchases. The client was paid $2,500 in damages.
Avallone is not the only advisor from the National Securities accused of recommending unsuitable investments. In 2017, the firm was named among 48 others who have at least 30% of its workers red-flagged in the past. According to the report by Reuters, 35% of National Securities have been in involved in financial issues or cited in regulatory disputes.