Securities Lawyers Blog
According to BrokerCheck records financial advisor Stuart Pearl (Pearl), currently employed by International Assets Investment Management, LLC (International Assets) and formerly employed by David A. Noyes & Company (David A. Noyes) has been subject to five customer complaints, two terminations for cause, and one regulatory action during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the complaints against Pearl concern allegations of unsuitable investments, unauthorized trading, and margin trading among other causes of action.
In June 2015 Pearl was terminated by Ameriprise Financial Services, Inc. (Ameriprise Financial) for violation of company policy related to use of discretion in non-discretionary accounts and complying with supervision.
In October 2017 FINRA sanctioned Pearl finding that Pearl consented to the sanctions and findings that he effected securities transactions in a customer’s account on several occasions on a discretionary basis without prior written authorization from the customer and without prior written acceptance of the account as discretionary from his member firm. FINRA also found that Pearl made unsuitable recommendations in two other customers’ joint brokerage account when he recommended the customers use margin to effect several trades. According to FINRA, the recommendations made by Pearl to purchase securities on margin were unsuitable in light of the customers’ investment objectives, risk tolerances, and their financial situation and needs. FINRA found that these purchases caused the account to be subject to seven margin calls during the relevant period.
In March 2019 David A. Noyes permitted Pearl to resign stating that Stuart Pearl resigned while on heightened supervision. The firm claims that Pearl had not followed his heightened supervision plan and would have been terminated had he not resigned.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. Advisors are also not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.
According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases. In addition, research has show a disturbing pattern with troublesome brokers where brokers with high numbers of customer complaints are not kicked out of the industry but instead these brokers are sifted to lower quality brokerage firms with loose hiring practices and higher rates of customer complaints. These lower quality firms may average brokers with five times as many complaints as the industry average.
Pearl entered the securities industry in 1986. From July 2015 until April 2019 Pearl was registered with David A. Noyes. Since May 2019 Pearl has been registered with International Assets out of the firm’s Racine, Wisconsin office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.