Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Blaine Stahlman (Stahlman), currently associated with American Global Wealth Management, Inc. / First Asset Financial Inc., has at least one disclosable event. These events include one tax lien, alleging that Stahlman recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 16, 2024.
Without admitting or denying the findings, Stahlman consented to the sanctions and to the entry of findings that he failed to reasonably supervise a registered representative’s recommendations of a speculative, unrated debt security to retail customers. The findings stated that the representative sold a total of $494,000 of the debt security to retail customers, where the sales were not suitable or in the best interests of the customers given the customers’ investment profiles and the fact that some of the customers were seniors. Stahlman was the representative’s direct supervisor and approved each sale of securities after reviewing the application documents. Furthermore, the representative had shared concerns with Stahlman that business model of the company whose debt was being sold was not viable and could fail, but Stahlman nevertheless continued to approve the sales to customers without exercising any additional supervisory scrutiny with respect to the company’s business. The findings also stated that Stahlman failed to retain and review that representative’s business-related email communications, despite knowing that the representative was using non-firm email for securities business purposes. The firm’s WSPs, which Stahlman was responsible for establishing and maintaining, prohibited its representatives from using email to correspond with customers, and instructed representatives to conduct all communications with customers by telephone. Nonetheless, Stahlman was aware that the representative routinely engaged in email communication from an outside, personal email account about the firm’s securities business, including communications with customers and with representatives of the debt security issuing company. Stahlman did not take reasonable steps to ensure that the representative’s business-related electronic communications were preserved as part of the firm’s books and records, or subjected to supervisory review.
Brokers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) standard of care under the Securities Exchange Act of 1934 which establishes a ‘best interest’ standard for broker-dealers and associated persons. Reg BI applies when brokers recommend a retail investor engage in securities transaction or an investment strategy involving one or more securities. Reg BI also applies to financial advice concerning the transfer of funds and opening of accounts. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. Finally, the advisor must use their knowledge of the first two elements to consider reasonably available investment option alternatives and come to the conclusion that there is a reasonable basis to believe that the recommendation or advice being provided is in the retail investor’s best interest.
Finally, an advisor must also analyze the specific account features offered and determine whether their client can benefit from them in order to meet their care obligations. While securities and investments come with costs that must be considered, the type of securities account also has changes the cost equation for the investor and can change the retail customers’ future investment returns. The associated person must consider the different types of securities accounts for their client and determine whether or not the cost or features are reasonably needed for the client or if the customer’s current account costs and features are superior to solutions available to the advisor. In any event, the type of account and services recommended must be in the investor’s best interest.
Stahlman entered the securities industry in 1983. Stahlman has been registered as a Broker with American Global Wealth Management, Inc. / First Asset Financial Inc. since 2025.
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.
