Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Helen grace Caldwell (Caldwell), previously associated with Wells Fargo Clearing Services, LLC, has at least 3 disclosable events. These events include one customer complaint, 2 regulatory events, alleging that Caldwell recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on August 16, 2024.
Respondent Caldwell failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $500,000.00 on April 03, 2024.
Claimant alleges that Caldwell, while associated with CGMI, made an unsuitable recommendation and fraudulently induced Claimant to invest in a private investment not offered by CGMI resulting in monetary losses.
FINRA BrokerCheck shows a final customer complaint on July 06, 2023.
Without admitting or denying the findings, Caldwell consented to the sanction and to the entry of findings that she declined to provide on-the-record testimony requested by FINRA in connection with an investigation into the circumstances giving rise to Form U5s filed by her former member firms. The findings stated that one of Caldwell’s former firms submitted an amended Form U5 disclosing that it was internally reviewing whether she had adequately disclosed OBAs and solicited firm clients to invest in her film production business. Shortly thereafter, the firm filed another amended Form U5 disclosing that its internal review had concluded that Caldwell did not adequately disclose her OBA and was soliciting firm clients to invest in her OBA, several of whom subsequently made investments. In addition, another firm filed a Form U5 disclosing that Caldwell had been discharged following an internal review concerning the accuracy of disclosures that she made to the firm and her compliance with its Outside Activities and Outside Investment Policy.
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 Reg BI standard of care applies to registered representatives making recommendations to customers in the purchase, sale, or exchange of securities or the implementation of investment strategies involving securities and non-securities. The rule also applies to the handling of opening accounts such as account transfers and types of accounts being recommended to be opened. 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.
Caldwell has been in the securities industry for more than 30 years. Caldwell has been registered as a Broker with Wells Fargo Clearing Services, LLC 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.
