Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Lisa Jones (Jones), currently associated with PFS Investments Inc., has at least 2 disclosable events. These events include 2 tax liens, alleging that Jones recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint on December 18, 2024.
On November 4, 2024, Respondent entered into an Acceptance, Waiver, and Consent (“AWC) with FINRA wherein Respondent consented to a two-month suspension from associating with any FINRA member and to the payment of a fine in the amount of $5,000. According to the findings set forth in the AWC, which Respondent neither admitted nor denied, in August 2021, Respondent disclosed to her firm, PFSI, that she created an LLC to operate an ecommerce storefront and, to manage her storefront, used the services of a company owned and operated by three other PFSI registered representatives, a company whose sole line of business involved assisting customers with setting up and operating ecommerce storefronts. Between August 2021 and February 2023, without informing her firm, Respondent told other PFSI representatives about her e-commerce storefront and the services provided by the company she had engaged, and in return, Respondent was paid at least $16,000 in referral fees for referring five representatives to the company. During the same period, Respondent affirmed on three annual compliance questionnaires that she had completely and accurately disclosed her outside business activities to the Firm. Although Respondent had disclosed her LLC and personal e-commerce storefront, she had not disclosed the receipt of fees for referring others to the company.
FINRA BrokerCheck shows a final customer complaint on November 04, 2024.
Without admitting or denying the findings, Jones consented to the sanctions and to the entry of findings that she engaged in an OBA without providing prior written notice to her member firm. The findings stated that in August 2021, Jones disclosed to the firm that she created an LLC to operate an e-commerce storefront. To manage her storefront, Jones used services purchased from a company owned and operated by three other firm registered representatives. This company had one line of business that assisted customers with setting up and operating ecommerce storefronts. Between August 2021 and February 2023, without informing her firm, Jones told other representatives about her e-commerce storefront and the services provided by the company she had engaged. The company paid Jones at least $16,000 in referral fees for successfully referring five representatives to the company. During the same period, Jones affirmed on annual compliance questionnaires that she had completely and accurately disclosed her OBAs to the firm. Although Jones had disclosed her LLC and personal e-commerce storefront, she had not disclosed the receipt of fees for referring others to the company.
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. The cost of the recommendation and information about the investor are always included in 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, a brokerage firm should not depend solely on information from the issuer regarding a company, but must perform its own thorough investigation.
Additional investor safeguards include broker disclosure requirements. 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 history 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.
Jones entered the securities industry in 1999. Jones has been registered as a Broker with PFS Investments Inc. since 1999.
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.
