Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Ryan Bennett (Bennett), previously associated with First Heartland Capital, Inc., has at least one disclosable event. These events include one tax lien, alleging that Bennett recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on November 13, 2024.
Without admitting or denying the findings, Bennett consented to the sanctions and to the entry of findings that he failed to provide written notice to his member firm that his engagement in an OBA exceeded the scope of his prior notice. The findings stated that upon joining the firm, Bennett disclosed that he had been engaging in an OBA with a company that provides online estate planning services, by referring individuals to the company in exchange for referral commissions. Bennett requested approval to continue the activity while associated with the firm. The firm stated that it would approve Bennett’s continued engagement in this OBA but would prohibit Bennett from accepting compensation for any referrals he made. In response, Bennett stated in writing to the firm that he would not engage in the OBA at all. Nevertheless, Bennett executed a partnership agreement with the company, on behalf of a marketing entity that Bennett had co-founded. Bennett referred eleven individuals, including nine firm customers, to the company for estate planning services. Through his marketing entity, Bennett received $2,750 in commissions in connection with these referrals. The findings also stated that Bennett held a beneficial interest in six outside brokerage accounts without prior written consent from the firm. Bennett did not disclose these accounts to the firm or take any steps to provide duplicate transaction confirmation or periodic account statements to the firm.
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 for investors is to mandate broker discloses. Brokers are required by FINRA to reveal the events such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters on their public BrokerCheck reports. FINRA has recognized that recent research shows past regulatory and customer complaint issues can indicate future problems for brokers. 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.
Bennett has been in the securities industry for more than 9 years. Bennett has been registered as a Broker with First Heartland Capital, Inc. 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.
