Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) sanctioned broker Stephen Dealy (Dealy) concerning allegations that Dealy willfully failed to timely amend his Form U4 to disclose a federal tax lien. FINRA also alleged that Dealy failed to report written complaints he received from his customers to Investors Capital Corp. (ICC).
Dealy first became registered with FINRA in 1983. From November 21, 2001 to September 12, 2014, Dealy was registered through ICC. On September 12, 2014, ICC filed a Form U5 terminating Dealy’s registration with the firm.
According to Dealy’s public disclosures the broker has been subject to seven customer complaints. These statistics are alarming because multiple customer complaints on a broker’s record are exceedingly rare. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. FINRA’s disclosure records do not just cover customer complaints but also include IRS tax liens, judgments, and even criminal matters. Therefore, the number of brokers with multiple customer complaints is constitutes only a very small percentage of licensed brokers.
In the case Dealy’s customer complaints the majority of the complaints appear to allege unsuitable recommendations in a variety of alternative investments and private placements including non-traded real estate investment trusts (Non-Traded REITs), oil and gas private placements, and certain debentures. The products invested in include Insight Debentures and Provident Royalties among other investments.
According to the FINRA action, the agency requires brokers to keep their disclosures current at all times and file any amendments within 30 days after learning of the facts or circumstances giving rise to the amendment. FINRA alleged that Dealy failed to update his disclosures to reflect unsatisfied judgments or liens. FINRA found that on October 19, 2010, the IRS notified Dealy that it had recorded a tax lien against him for $29,170 in taxes that Dealy owed. FINRA stated that it was not until FINRA questioned Dealy in May 2013 about the tax lien that the disclosures were updated. FINRA also alleged that Dealy failed to report customer complaints to ICC. Between May 5, 2010, and April 2, 2014, when five of Dealy’s customers complained to him through email about performance and operational problems with the investments that Dealy recommended to them.
Investors who have suffered losses through unsuitable investment recommendations may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of where brokerage firms failure to supervise their representatives sale of alternative investments. Our consultations are free of charge and the firm is only compensated if you recover.