Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Harshavardhan Pakhal (Pakhal), previously associated with Bofa Securities, Inc., has at least one disclosable event. These events include one tax lien, alleging that Pakhal recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on September 26, 2024.
Without admitting or denying the findings, Pakhal consented to the sanctions and to the entry of findings that he engaged in OBAs without providing prior written notice to or receiving written approval from his member firm to engage in those activities. The findings stated that Pakhal began working for an international retail company as a director in the company’s corporate development department. Pakhal assisted with various investment projects that the company’s supervisors and managers were considering, including coordinating project activities and ensuring timely task completion. This company paid Pakhal approximately $530,000. While employed by this company, Pakhal incorrectly answered No on annual compliance certifications to questions asking whether he was involved in any OBA. Later, again without providing notice to his firm, Pakhal accepted a separate position as vice president of corporate development for a technology company. Pakhal’s responsibilities included preparing presentations for senior management and assisting with fundraising efforts. This employer paid Pakhal approximately $77,500. Pakhal’s firm discovered his employment with both companies when it reviewed a press release announcing his new position with the technology company. Pakhal initially denied to his firm that he had any outside employment, but he later admitted that the press release was accurate.
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. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types 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 financial advisor must use their knowledge of both their reasonable diligence into investment options as well as their knowledge of the investor’s client specific needs to consider reasonably available investment options. Those investment options must allow the broker to determine that there is a reasonable basis that the recommendation 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.
Pakhal has been in the securities industry for more than 6 years. Pakhal has been registered as a Broker with Bofa Securities, Inc. since 2021.
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.
