Broker Jeffrey Goldman in Chapin, Davis Firm Has Customer Complaint

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that Broker Jeffrey Goldman (Goldman), currently employed by Chapin, Davis has been subject to at least one disclosable event. These events include one customer complaint. According to records kept by The Financial Industry Regulatory Authority (FINRA), Goldman’s most recent customer complaint alleges that Goldman recommended unsuitable investments in structured products and makes allegations concerning misconduct relating to the handling of the customer’s accounts.

FINRA BrokerCheck shows a settled customer complaint with a damage request of $77,696.75 on December 06, 2023.

The client alleges that two Structured Notes purchased (01/22/2022 and 02/15/2022) were unsuitable.

Structured products belong to a category of derivative products, which obtain their performance from data linked to the market. The market risk of a structured product is typically linked to an underlying reference. The origin could be a single security, multiple securities such as a market index, commodities, interest rates, or a real estate loan portfolio. The variety of products that can be structured demonstrates the difficulty in formulating a single unified definition of a structured product.

However, most structured products produce inferior risk/return profiles than ordinary debt or equity instruments because the brokerage firms that issue these products, mostly large banks, seek to profit from the spread between the payment to investors and the amount of money the brokerage firm can make from the issuance of the structured notes minus the commissions and fees that must be paid to brokers selling the product. The intricate nature of these products makes it difficult for most investors to fully comprehend their advantages or calculate the risks and potential returns. These investments are often misrepresented by brokers as fixed income or bond-like options that provide a return of capital. Because structured products carry a higher risk of loss compared to corporate debt and other fixed-income investments, they should not typically be recommended as fixed-income alternatives.

Recently, firms have begun selling redeemable structured notes often linked to a single investment or a basket of investments. A few cases of structured products based on single securities reveal their excessive risk while lacking meaningful advantages. Our firm analyzed a structured note linked to the stock of Peloton that promised to investors 1.0625% interest monthly or 12.75% annually and another note linked to the stock of Zillow which promised a 12% annual interest payment paid monthly so long as the respective stock prices stayed above a referenced value. Only if both stocks depreciate by nearly 40% would the interest payment be entirely removed. In addition, if the stocks lost more than approximately 40% of their value then the investor would also lose their corresponding principal based upon the performance of the stocks and could lose their entire investment. Further, the notes were callable and could be cancelled by the sponsor.

These products are very high risk and low reward propositions because the investor can only profit at most by 12-12.75% over the course of one year. Even if Peloton or Zillow doubled in value all the investor could achieve would be the interest payment as their profit and none of the price appreciation. Meanwhile the maximum loss is 100% of the investment if the stocks fell severely. Accordingly, the investor takes dramatic downside risks associated with the volatile stocks while having no chance to participate in the success of the stock.

According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases.

Goldman entered the securities industry in 1994. Goldman has been registered as a Broker with Chapin, Davis since 1997.

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.

 

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