Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) sanctioned broker Douglas Campbell Jr. (Campbell) concerning allegations that between May 2008 and September 2008, while registered with Wedbush Morgan Securities, Inc. (Wedbush), he engaged in unsuitable trading a customer’s account by recommending purchases of three speculative private placement investments that were not consistent with the customer’s investment objectives, resulting in an overconcentration in the customer’s account. FINRA found that Campbell’s recommendations were made without reasonable grounds for believing that they were suitable for the customer.
In addition, according to Campbell’s public records four customers have filed complaints concerning Campbell’s investment advice. These statistics are troubling because multiple customer complaints on a broker’s record are rare. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. These disclosures do not necessarily have to include customer complaints but can include IRS tax liens, judgments, and even criminal matters. The number of brokers with multiple customer complaints is far smaller. The complaints against Campbell alleged fraud, breach of fiduciary duty, excessive trading, and unsuitable investments.
Campbell first became registered with FINRA in 1994. On July 9, 2007, Campbell became registered Wedbush. On November 29, 2012, Wedbush filed a Form U5 reporting that Campbell voluntarily terminated his employment on November 26, 2012.
Under FINRA’s suitability rule, in recommending to a customer the purchase of any security broker shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts disclosed as to their other security holdings and as to their financial situation and needs. FINRA stated that Campbell violated this rule when he recommended that a customer invest a majority of the funds in her Wedbush account in three speculative investments.
Between May 2008 and September 2008, despite the customer’s objective to preserve capital, FINRA found that Campbell recommended the customer invest in three speculative securities including Oilsands Quest, Inc., Homeland Energy Group and Cline Mining Corp. resulting in a concentration of between 41% and 89% of the customer’s account value. FINRA found that the concentrated position was unsuitable for the customer in light of her financial profile, personal circumstances and limited ability to withstand financial losses. FINRA found that due to these recommendations that the customer’s account sustained losses of approximately $99,000.
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 unsuitable private placements, excessive trading, and investments in high risk securities. Our consultations are free of charge and the firm is only compensated if you recover.