Securities Lawyers Blog
The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that Broker Kendal Fordham (Fordham), previously employed by Raymond James Financial Services, INC. 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), Fordham’s most recent customer complaint alleges that Fordham recommended unsuitable investments in structured products and makes allegations concerning misconduct relating to the handling of the customer’s accounts.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $50,000.00 on February 20, 2025.
Plaintiff alleges recommendation of unsuitable structured products and overconcentration of same due to losses from Client’s decision to liquidate notes prior to maturity
Structured products belong to a category of derivative products, which obtain their performance from data linked to the market. A structured product usually derives its market risk exposure from a specific reference source. A single security, a set of securities like a market index, commodities, interest rates, or a portfolio of real estate loans each can serve as the source. The variety of products that can be structured demonstrates the difficulty in formulating a single unified definition of a structured product.
Compared to traditional debt or equity instruments, structured products generally yield inferior risk/return profiles, as the issuing brokerage firms—primarily large banks—profit from the spread between investor payouts and the earnings from issuing structured notes, after accounting for broker commissions and fees. Most investors may struggle to grasp the benefits of these investments or accurately assess the likelihood of gains and losses due to their complexity. Many brokers misrepresent these investments to clients as fixed income or bond like investments with return of capital. Due to the high risk of loss compared to corporate debt or other fixed income alternatives it would never be appropriate to recommend most structured products 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. We analyzed a structured note associated with Peloton’s stock that guaranteed investors 1.0625% monthly interest (12.75% annually) and a similar note tied to Zillow’s stock, offering 12% annual interest paid monthly, contingent on the stock prices staying above a specified level. Both stocks could lose around 40% of their value before the interest payment would be eliminated entirely. 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.
Fordham has been in the securities industry for more than 2 years. Fordham has been registered as a Broker with Raymond James Financial Services, INC. since 2017.
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.
