Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), broker David Reynolds (Reynolds) was barred in November 2017 from the financial industry for concerning allegations that he misappropriated customer funds and did not provide requested documents to FINRA. According to FINRA, Reynolds consented to the sanction and bar due to the fact that he refused to provide requested documents during a period of investigation. At this time it is unclear the extent and nature of the appropriation that occurred.
Reynolds employer, Allstate Financial Services LLC (Allstate Financial), discharged Reynolds in October 2017 for Reynold’s failure to produce requested documents for the firm’s investigation of his alleged misappropriation of customer funds.
In addition, Reynolds has been subject to a customer complaint. In January 2018, a customer alleged that Reynolds did not return customer’s investment funds to the customer. The dispute settled at $66,654.25.
FINRA prohibits brokers and firms from using customer’s funds or securities for improper use. Improper use includes the conversion of client funds. By failing to provide FINRA and Allstate Financial with requested documents, Reynolds impeded on his firm’s duty to supervise. Brokerage firms owe a duty to all of its customers to properly monitor and supervise its employees. The duty to supervise is a critical component of the securities regulatory scheme. Supervisors have an obligation to respond vigorously to indications of irregularity, often times referred to as “red flags.” A supervisor cannot disregard red flags and must act decisively and specifically to prevent improper conduct by their brokers. The importance of proper supervision is manifested in various types of securities activities. Brokerage firms are responsible for monitoring a broker’s investment recommendations to clients, outside business activities, and representations to investors among other obligations. In addition, brokerage firms are responsible for conducting due diligence on the securities products they sell and devising a written supervisory system to achieve compliance with the securities laws.
Reynolds entered the securities industry in 2003. From 2016 to 2017, Reynolds was registered with Allstate Financial. From 2008 to 2015, Reynolds was registered with Princor Financial Services Corporation. In 2008, Reynolds was registered with Merrill Lynch, Pierce, Fenner & Smith Incorporated. From 2003 to 2004, Reynolds was registered with E*Trade Securities LLC. Reynolds is currently not registered with any firm.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of investment fraud and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.