Securities Lawyers Blog
Please note: This article does NOT relate to Scott D. Smith – a current Ameriprise Advisor.
The Financial Industry Regulatory Authority (FINRA) sanctioned broker Scott Smith (Smith) concerning allegations that between October 2009 and January 2013, Smith mismarked as unsolicited order tickets for thousands of trades that were actually solicited by the broker. By doing so, FINRA found that Smith caused Ameriprise Financial Services, Inc.’s (Ameriprise) books and records to be inaccurate.
Smith entered the securities industry in 1982. Since 2005, Smith has be associated with Ameriprise until his registration was terminated in February 2013. FINRA alleged that from October 2009 through January 2013, Smith executed 8,169 trades. According to FINRA, Smith marked the order tickets for 6,207 of those trades, or 76%, as being unsolicited. An unsolicited trade means that the broker did not make a recommendation to the client to purchase the particular security. By marking a trade as unsolicited, the broker typically is claiming that the investment opportunity was not brought to the client’s attention by the broker and instead the client instructed the broker to execute the trade on his or her behalf.
FINRA alleged that thousands of Scott’s trades marked as unsolicited were in fact trades that Smith had solicited. FINRA determined that Smith mismarked the order tickets for these trades as unsolicited based on a mistaken belief that a trade was not solicited if he brought multiple trading ideas to the customer so long as the customer made the ultimate decision as to which trades to execute or if the customer had previously owned the security. FINRA found that Ameriprise issued Smith a Letter of Reprimand on October 10, 2011, for mismarking as unsolicited the order tickets for solicited trades. Despite the reprimand, FINRA found that Smith continued to mismark order tickets for solicited trades as unsolicited.
Specifically, FINRA alleged that between October 11, 2011 and January 25, 2013, Smith mismarked the trade tickets for at least 69 solicited trades as unsolicited. The FINRA rules require brokerage firms to make and preserve books and records. By mismarking the order tickets for thousands of solicited trades as unsolicited, FINRA found that Smith caused Ameriprise’s books and records to be inaccurate.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of brokerage firm’s failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.