Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Lincoln Mason (Mason), previously associated with Edward Jones, has at least 2 disclosable events. These events include one customer complaint, one tax lien, alleging that Mason recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 17, 2024.
Without admitting or denying the findings, Mason consented to the sanctions and to the entry of findings that he engaged in an OBA without providing prior written notice to and receiving his firm’s approval of that activity. The findings stated that Mason created and was the sole member of a LLC for the purpose of holding a commercial property suitable for a single business office that he owned. When Mason created the LLC, he intended to transfer his commercial property into the LLC, and to use the commercial property as his firm branch office, whereby the firm would pay Mason rent, through the LLC. For his branch office. The firm became aware of the LLC as a result of its compliance program. At that time, however, the LLC did not hold any assets, and his firm approved the OBA. Later, Mason transferred his commercial property into the LLC, and contacted the firm to establish that property as his Edward Jones branch office. Mason was advised by the firm that properties owned by associated persons could not be used as a branch office. Mason provided false information and fictitious documents to the firm in order to hide his ownership interest in the LLC and its property and induce the firm to lease that property for his branch office. Mason’s firm entered into a lease agreement with the LLC and unknowingly allowed Mason to use the property that he owned as his branch office. After executing the lease agreement, the firm’s compliance department continued to request additional information from Mason regarding the LLC and required him to provide an updated OBA disclosure form. While Mason acknowledged his ownership interest in the LLC at this time, he falsely claimed that the only property it held was a ‘storage facility’. Mason also claimed that he had sold the commercial building and that the purchase funds had changed hands, neither of which was true. Prior to any rent payments being made, Mason’s firm terminated the lease agreement and terminated Mason’s registration shortly thereafter.
FINRA BrokerCheck shows a settled customer complaint on May 18, 2023.
Client alleges the financial advisor likely forged the client’s signature on an account form. Client also alleges there is liability for the advice the financial advisor provided regarding Social Security elections and portfolio distributions.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Data on the investor and the expense of the advice are consistently part of material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, rather than depending solely on the issuer for company information, a brokerage firm should conduct its own reasonable investigation.
Another protective measure is to require broker discloses. Brokers are required to reveal important events, such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters, publicly on their BrokerCheck reports. FINRA has recognized that recent studies offer evidence showing that brokers with a past record of regulatory and customer complaint issues are more likely to have such issues in the future. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Mason has been in the securities industry for more than 2 years. Mason has been registered as a Broker with Edward Jones since 2019.
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.
