It is crucial for investors to take allegations of financial malpractice seriously, as they could potentially indicate significant risks to their investments. One such allegation currently being investigated involves a Registered Representative named John Marcheso and his former employer, CENTAURUS FINANCIAL, INC. The case revolves around a customer dispute filed on 9/8/2023, claiming that Marcheso recommended an unsuitable investment that subsequently performed poorly. The customer is seeking $73,000 in damages.
Understanding the Allegation
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The complaint, which is currently pending, did not specify the dates of the alleged activity. However, the crux of the dispute is that the investment recommended by Marcheso was not suitable for the customer. Suitability is a key concept in investment advising, as advisors are required to recommend investments that align with their clients’ financial circumstances, goals, and risk tolerance.
Marcheso’s Response
Marcheso has categorically denied any wrongdoing, asserting that the allegations are without merit. He insists that the investments were suitable and were recommended based on the customer’s objectives, goals, and financial circumstances. Moreover, Marcheso claims that the customer confirmed in writing that they had received and understood all relevant investment documentation and disclosures.
Understanding Suitability and the FINRA Rule
The Financial Industry Regulatory Authority (FINRA) has specific rules in place to protect investors. One such rule is the Suitability Rule (Rule 2111), which requires brokers to have a reasonable basis for recommending a transaction or investment strategy. This rule is based on the information they obtain through reasonable diligence to ascertain the customer’s investment profile.
What is FINRA Rule 2111?
FINRA Rule 2111, also known as the Suitability Rule, requires that a firm or associated person have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer. This determination must be based on the information obtained through the reasonable diligence of the firm or associated person to ascertain the customer’s investment profile.
Why Investor Vigilance Matters
It is crucial for investors to stay informed about their investments and the advisors managing them. Allegations such as the one against Marcheso should not be taken lightly, as they could potentially indicate a breach of fiduciary duty or other forms of financial malpractice.
How FINRA Arbitration Can Help
Investors who believe they have been wronged can seek recourse through FINRA Arbitration. This is a dispute resolution process that is faster, less formal, and often less expensive than court litigation. Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, can assist investors in this process. With over 50 years of experience and a 98% success rate, they offer free consultations and operate on a “No Recovery, No Fee” basis.
Red Flags for Financial Advisor Malpractice
There are several red flags investors should be aware of, including frequent trading, unauthorized trades, and recommendations of unsuitable investments. If any of these occur, it may be time to seek legal advice.
Recovering Losses
Investors who have suffered losses due to alleged advisor malpractice can recover their losses through FINRA Arbitration. The team at Haselkorn & Thibaut is currently investigating this case and is available to assist other investors who may have been affected. They can be reached at their toll-free consultation number, 1-800-856-3352.
Investors are encouraged to stay vigilant and proactive in managing their investments. By understanding the seriousness of allegations and the mechanisms in place to protect their interests, they can better safeguard their financial futures.
