Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker John Perez-cubero (Perez-cubero), previously associated with Morgan Stanley, has at least 2 disclosable events. These events include one customer complaint, one tax lien, alleging that Perez-cubero recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on September 11, 2024.
Without admitting or denying the findings, Perez-Cubero consented to the sanction and to the entry of findings that he failed to produce information and documents requested by FINRA during an investigation that originated from a Form U5 filed by his member firm. The findings stated that the firm disclosed on the Form U5 that Perez-Cubero had been terminated due to allegations of an unauthorized disbursement from a customer’s checking account that was covered by an unauthorized transfer from customer’s brokerage account. Although Perez-Cubero initially cooperated with FINRA’s investigation by providing documents and information and appearing for testimony, ultimately, he ceased doing so.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $15,000.00 on October 25, 2023.
Client’s attorney alleges misappropriation and forgery with respect to disbursement of funds from the client’s account.
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. 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.
An advisor must understand the type of account, securities, and their client in order to meet their care obligations. The type of securities account has the potential to greatly affect retail customers’ costs and investment returns. Different types of securities accounts can offer different features, products, or services, and not all types of accounts or services would be in every investor’s best interest.
Perez-cubero has been in the securities industry for more than 5 years. Perez-cubero has been registered as a Broker with Morgan Stanley since 2018.
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.
