Michael Gennawey, a broker and investment advisor associated with LPL Financial LLC, is currently facing allegations from a former client regarding the mishandling of interest earned on investments and misrepresentation of brokerage and advisory commissions. The client, who is represented by counsel, filed a customer dispute on January 11, 2024, which was subsequently denied.
The client’s allegations revolve around the lack of proper accounting for interest earned on their investments, resulting in the alleged withholding of interest by Gennawey and LPL Financial. Additionally, the client claims that there was a misrepresentation of brokerage and advisory commissions related to their investments in U.S. Government Agency, U.S. Government Zeros, and U.S. Zeros Receipts debt securities.
LPL Financial and Gennawey have denied the allegations, stating that no misrepresentation of commissions occurred and that all interest earned on the client’s investments was properly accounted for and not withheld by either party. They maintain that the client was provided with all necessary accounting information related to their investments.
According to a Forbes article, financial advisor malpractice and misconduct can lead to significant losses for investors. Common forms of misconduct include misrepresentation of investment risks, unauthorized trading, and failure to disclose conflicts of interest.
Understanding the FINRA Rules and Regulations
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The Financial Industry Regulatory Authority (FINRA) is responsible for overseeing the activities of broker-dealers and their registered representatives. FINRA Rule 2010 requires that brokers and firms “observe high standards of commercial honor and just and equitable principles of trade” in the conduct of their business.
In the case of interest earned on investments, FINRA Rule 2231 states that a broker-dealer must promptly transmit to the customer any funds or securities received in connection with the customer’s account. This includes any interest earned on the customer’s investments, which must be properly accounted for and credited to the customer’s account.
Regarding the disclosure of commissions, FINRA Rule 2232 requires that a broker-dealer provide a customer with a written notification disclosing the amount of the commission charged for a transaction, as well as any other remuneration received or to be received by the broker-dealer in connection with the transaction.
The Importance of Transparency for Investors
Transparency is crucial in the financial industry, as it allows investors to make informed decisions about their investments and the professionals they work with. When a broker or investment advisor fails to provide accurate and timely information about interest earned on investments or misrepresents commissions, it can erode trust and lead to financial losses for the investor.
Investors have the right to expect that their brokers and investment advisors will act in their best interests and provide them with the necessary information to understand their investments and the associated costs. When this trust is violated, investors may seek legal recourse to recover any losses they have suffered as a result of the broker’s or advisor’s misconduct.
The allegations against Michael Gennawey and LPL Financial serve as a reminder of the importance of working with trusted professionals who prioritize transparency and adhere to FINRA rules and regulations. Investors should regularly review their account statements and ask questions about any discrepancies or unclear information to ensure their investments are being handled appropriately.
Investors can check the background and disciplinary history of their financial advisors by accessing their FINRA BrokerCheck report.
Recognizing Red Flags and Seeking Help
Investors should be aware of potential red flags that may indicate financial advisor malpractice or misconduct. These can include:
- Lack of transparency regarding investment fees, commissions, or interest earned
- Inconsistent or unclear account statements
- Unauthorized trades or changes to investment strategy
- Pressure to make quick investment decisions or invest in unsuitable products
If an investor suspects that their financial advisor has engaged in misconduct or malpractice, they should contact a qualified investment fraud attorney to discuss their legal options. Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating the allegations against Michael Gennawey and LPL Financial.
Haselkorn & Thibaut has over 50 years of combined experience in representing investors who have suffered losses due to broker misconduct. With a 98% success rate and a “No Recovery, No Fee” policy, the firm has helped countless investors recover their losses through FINRA arbitration. Investors who believe they may have been affected by the alleged misconduct of Michael Gennawey or LPL Financial are encouraged to contact Haselkorn & Thibaut for a free consultation by calling their toll-free number at 1-888-628-5590.
As the investigation into the allegations against Michael Gennawey and LPL Financial continues, it is crucial for investors to remain vigilant and proactive in protecting their financial interests. By working with experienced professionals and staying informed about their investments, investors can help safeguard their financial future and hold accountable those who breach their trust.
