Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker George Snyder (Snyder), previously associated with Ameriprise Financial Services, LLC, has at least one disclosable event. These events include one tax lien, alleging that Snyder recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 11, 2024.
Without admitting or denying the findings, Snyder consented to the sanctions and to the entry of findings that he willfully violated the Care Obligation under Rule 15l-1 of the Securities Exchange Act of 1934 (Reg BI) by recommending purchases that were not in the best interest of his customers. The findings stated that Snyder recommend customers invest in leveraged exchange traded funds, also known as Non-Traditional Exchange-Traded Products (NT-ETPs). Snyder did not have an understanding of the features and risks associated with the investments, including the holding-period risk of NT-ETPs or the volatility of the commended stocks, and he was unfamiliar with the strategies or relative costs of the product he recommended. Snyder’s customers had minimal or no experience investing in these products, and he did not consider his customers’ specific investment profiles. Six of the customers were senior investors, two of whom had a moderate risk tolerance, and five additional customers had conservative or moderate risk tolerances. The customers who purchased the recommended stocks suffered total realized losses of approximately $30,000. Snyder’s member firm has offered rescission of the transactions to each of the customers. The findings also stated that Snyder mismarked 32 order tickets associated with the recommendations he made into the NT-ETPs as unsolicited when he had solicited the trades causing his firm to make and preserve inaccurate books and records. The findings also included that Snyder exercised discretion without written authorization when effecting some of the NT-ETP trades. The customers had given Snyder implied authority to exercise discretion in their accounts, but his firm’s WSPS prohibited discretionary trading in brokerage accounts.
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. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest.
Brokerage firms and advisors must also understand the features and limitations of various account types as part of meeting Reg BI’s care obligations. Firms typically offer a variety of account options and services with different trading costs, services, such as account and activity monitoring. An advisor’s recommendation as to what type of securities account to open can alter the customers’ overall costs and investment returns. The advisor must determine that the client can benefit from the type of account being recommended to be opened and in the investor’s best interest taking into account the costs, benefits, and needs of the client.
Snyder has been in the securities industry for more than 22 years. Snyder has been registered as a Broker with Ameriprise Financial Services, LLC since 2000.
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.
