Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Ryan Fleming (Fleming), previously associated with Cantella & Co., Inc., has at least one disclosable event. These events include one tax lien, alleging that Fleming recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 10, 2024.
On December 10, 2024, the Securities Division entered into a Consent Order with The Pilot’s Advisor, LLC and Ryan Joseph Fleming (‘Respondents’). The Securities Division alleged in the Consent Order that the Respondents unlawfully held The Pilot’s Advisor, LLC out as a Washington registered investment adviser when, in actuality, it was not registered as an investment adviser in Washington. Additionally, Respondents engaged in misleading advertisement that included use of performance returns that were based on fictitious characters, and not based on actual client performance. The advertisement was further misleading because it included 20-year performance data when the Respondents have less than 20 years of experience in the investment advisory business. In settling the matter, the Respondents agreed to cease and desist from violating the Securities Act. The Respondents further agreed to pay a fine of $20,000 and reimburse the Securities Division $2,500 for its costs of investigation. The Respondents waived their right to a hearing and to judicial review of the matter.
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. Every recommendation’s cost and investor details are always 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. Accordingly, a brokerage firm may not rely blindly upon the issuer for information concerning a company in lieu of conducting its own reasonable investigation.
Additional investor safeguards include broker disclosure requirements. Brokers are required to report events to FINRA, such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters, as shown on their BrokerCheck reports. FINRA has recognized that recent research shows brokers with a past record of regulatory or customer complaint issues are more likely to have such problems again 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.
Fleming has been in the securities industry for more than 3 years. Fleming has been registered as a Broker with Cantella & Co., Inc. since 2008.
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.
