Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Yonglin Ren (Ren), currently associated with Cambridge Investment Research, Inc., has at least 2 disclosable events. These events include 2 tax liens, alleging that Ren recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 17, 2024.
On September 9, 2024, without admitting or denying the findings, Ren entered into an Acceptance, Waiver and Consent (‘AWC’) with FINRA wherein Ren made multiple posts to hundeds of participants in WeChat, a platform for written communication unapproved by his firm, including after individually being warned by LPL not to use an unapproved messaging channel to communicate with customers in 2017 and 2019. Some of Ren’s posts related to the securities industry and included posts discussing market observation, investing strategies, and services he could provide through his firm. Ren did not retain his WeChat messages and did not provide copies of the messages to his firm. In 2019 and 2020 compliance questionnaires, Ren inaccurately stated that he only communicated with prospective customers through his firm email address. Ren agreed to a 30 calendar-day suspension from associating with any FINRA member in all capacities and to the payment of a fine in the amount of $5,000.
FINRA BrokerCheck shows a final customer complaint on September 09, 2024.
Without admitting or denying the findings, Ren consented to the sanctions and to the entry of findings that he caused his member firm to not capture or maintain communications by using an unapproved social media platform to communication relating to his securities business. The findings stated that Ren’s posts related to the securities industry and included posts discussing market observations, investing strategies, and services he could provide through his firm. In annual compliance questionnaires, Ren inaccurately stated that he only communicated with prospective customers through his firm email and was previously individually warned by his firm to not use the social media platform to communicate with customers.
Brokers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) standard of care under the Securities Exchange Act of 1934 which establishes a ‘best interest’ standard for broker-dealers and associated persons. Reg BI applies when brokers recommend a retail investor engage in securities transaction or an investment strategy involving one or more securities. Reg BI also applies to financial advice concerning the transfer of funds and opening of accounts. 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.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest.
Brokerage firms and advisors must also understand the features and limitations of various account types as part of meeting Reg BI’s care obligations. Firms typically offer a variety of account options and services with different trading costs, services, such as account and activity monitoring. An advisor’s recommendation as to what type of securities account to open can alter the customers’ overall costs and investment returns. The advisor must determine that the client can benefit from the type of account being recommended to be opened and in the investor’s best interest taking into account the costs, benefits, and needs of the client.
Ren entered the securities industry in 2006. Ren has been registered as a Broker with Cambridge Investment Research, Inc. since 2021.
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.
