Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Victor Lessinger (Lessinger), previously associated with Colorado Financial Service Corporation, has at least one disclosable event. These events include one tax lien, alleging that Lessinger recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 28, 2024.
Without admitting or denying the findings, Lessinger consented to the sanctions and to the entry of findings that he willfully violated Exchange Act Rule 15l-1(a)(1) by recommending that a retail customer invest in three high-risk closed-end management investment companies that were not in the customer’s best interest based on her investment profile. The findings stated that the customer, who is a senior, reported that her risk tolerance was moderate, and her investment objective was income. Lessinger’s recommended that the customer invest up to 37 percent of her net worth in the high-risk closed-end funds and as a result, the customer lost $5,029.85.
When your financial advisor is providing advice they must adhere to the SEC’s Regulation Best Interest (Reg BI) rule and standard of care. Reg BI replaced the former ‘suitability’ rule and created a ‘best interest’ standard for brokerage firms and registered representatives. This Reg BI standard of care applies to registered representatives making recommendations to customers in the purchase, sale, or exchange of securities or the implementation of investment strategies involving securities and non-securities. The rule also applies to the handling of opening accounts such as account transfers and types of accounts being recommended to be opened. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
Reg BI comes with different key obligations that associated persons must meet in dispensing advice. The care obligation requires registered representatives to carefully evaluate investment options, review the risks and rewards of the investment or service, compare similar products, and ensure that the recommended investment is appropriate for the customer and in the retail investor’s best interest. The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. The associated person must then apply both their reasonable diligence into various investment options as well as the information gathered as to the investor’s specific needs when considering the investment recommendation. The broker must explore various alternative investment options available to address these needs and determine that there is a reasonable basis to believe that the recommendation or service being recommended is in the retail investor’s best interest.
An advisor must understand the type of account, securities, and their client in order to meet their care obligations. The type of securities account has the potential to greatly affect retail customers’ costs and investment returns. Different types of securities accounts can offer different features, products, or services, and not all types of accounts or services would be in every investor’s best interest.
Lessinger has been in the securities industry for more than 44 years. Lessinger has been registered as a Broker with Colorado Financial Service Corporation since 2012.
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.
