Reg BI

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Sam Schoner (Schoner), currently associated with J.P. Morgan Securities LLC (JP Morgan), has been subject to at least four customer complaints during his career. The most recent complaints against Schoner alleged that Schoner recommended unsuitable investments in stocks and preferred stocks, including in First Republic Bank, among other allegations of misconduct relating to the handling of their accounts.

In December 2023 a customer complained that Schoner, from January 2012 to September 2023, engaged in unsuitable investment advice. The claim alleges $2.5 million in damages and is currently pending.

In September 2023 a customer complained that Schoner, from 2017 through 2023, engaged in unsuitable investment advice. The claim alleged almost $7.5 million in damages and settled for $950,000.

In May 2023 a customer complained that Schoner, from January 2021 to November 2021, engaged in unsuitable investment advice. The claim alleged $6.5 million in damages and settled for $950,000.

Preferred stocks are a hybrid of debt and equity and have attributes of both securities. Preferred stocks pay a stream of fixed or floating-rate payments similar to debt coupon payments but provide no participation in the issuer’s residual (equity) gains or any voting rights. Preferred stocks are far less stable than bonds and can even be more volatile than stocks based on market conditions. When a company is under stress, its equity and preferred stock can trade nearly in tandem with little difference in performance. The in tandem trading demonstrates that the market believes that there is little additional security protection provided by preferred stocks being higher up in the capital structure than common equity.

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Barry Schwartz (Schwartz), currently associated with UBS Financial Services Inc. (UBS), has been subject to at least two customer complaints and one regulatory action during his career. The most recent complaint against Schwartz alleged that Schwartz recommended unsuitable investments in various equity and alternative investments among other allegations of misconduct relating to the handling of their accounts.

In December 2023 a customer complained that Schwartz, from January 2021 to February 2022, engaged in unsuitability and overconcentration of certain investments, and that such investments resulted in principal losses. The investor also alleges misrepresentation with respect to the handling of Claimants’ investment accounts and violated the securities laws claiming $1 million in damages. The claim is currently pending.

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. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types 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.

Articles Posted in Reg BI

Sam Schoner Has Customer Complaints Related to First Republic Preferred Stock

UBS Advisor Barry Schwartz Has Customer Complaint