Securities Lawyers Blog
John Timberlake (Timberlake), a previously registered broker formerly employed at Carter Terry & Company, Inc. (Carter Terry), has been subject to at least four customer complaints during the course of his career. His most recent customer complaints allege Timberlake of making unsuitable trading recommendations. Additionally, Timberlake was recently discharged from Cater Terry & Company for violating the firm’s policies.
According to a BrokerCheck report, there have been four complaints against Timberlake in the past 5 years alleging him of making unsuitable recommendations. Collectively, the allegations brought up against Timberlake have settled for over $200,000.00. In October 2019, a customer filed a complaint against Timberlake for unsuitably recommending a speculative investment strategy. This matter settled for $50,000.00. Additionally, In March 2019, a customer alleged that Timberlake failed to make suitable investments, implement a proper investment strategy and properly manage the account. This matter settled in favor of the client for $55,000.00. Similarly, in January 2016, another customer alleged Timberlake of making unsuitable recommendations. Here, the customer settled for over $105,000.00.
Brokers have an obligation to make only suitable recommendations for investments to the client. There are many investments that are not appropriate for the majority of investors or for certain investors given their risk tolerance, age, and other factors. Brokers should not present these investment options to clients. There are two screens that brokers must employ to determine whether an investment is suitable for a client. First, there must be a reasonable basis for the recommendation – meaning that the product has been investigated and due diligence conducted into the investment’s features, benefits, risks, and other relevant factors. The broker must conclude that the investment is suitable for at least some investors and some securities may be suitable for no one. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short-term goals, age, disability, income needs, or any other relevant factor.