Investors need to be aware of the seriousness of allegations made against financial advisors. Recently, a customer dispute has been filed against Gary Costello, a broker and investment advisor currently associated with Aegis Capital Corp. The allegations are significant, claiming churning, unauthorized withdrawals, negligence, gross negligence, breach of fiduciary duty, breach of contract, breach of the duty of good faith and fair dealing, fraud, and state securities law violations. These allegations span from July 2019 to December 2022, with the claimants seeking $2,103,426.00 in damages.
Understanding the Allegation and the FINRA Rule
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The Financial Industry Regulatory Authority (FINRA) is a non-governmental organization that regulates member brokerage firms and exchange markets in the United States. According to FINRA Rule 2111, brokers 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 the reasonable diligence of the member or associated person to ascertain the customer’s investment profile.
Why This Matters for Investors
Allegations of this nature are serious as they indicate potential misconduct by a financial advisor. Such misconduct can lead to significant financial losses for investors. It’s crucial for investors to understand their rights and the steps they can take if they suspect malpractice.
Red Flags of Financial Advisor Malpractice
- Unauthorized transactions: If transactions appear on your account that you did not approve, it may be a sign of unauthorized trading.
- Excessive trading (Churning): This is when a broker conducts excessive buying and selling of securities in your account for the purpose of generating commissions.
- Negligence: This involves the failure to do something that a reasonable person would do under the same circumstances.
- Breach of fiduciary duty: This occurs when a financial advisor does not act in the best interest of the client.
Recovering Losses with FINRA Arbitration
Investors who have suffered losses due to financial advisor malpractice can seek recovery through FINRA arbitration. This is a streamlined, less formal process than court litigation and can often lead to faster resolution.
Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating this case. With over 50 years of experience and an impressive 98% success rate, they have successfully recovered losses for investors in numerous cases of broker misconduct. They offer free consultations to clients and operate on a “No Recovery, No Fee” policy. You can reach them at their toll-free consultation number, 1-800-856-3352.
In conclusion, investors must remain vigilant and informed about their financial advisor’s activities. Recognizing the red flags of malpractice and understanding the recourse available can protect them from significant financial losses.
