Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) in an acceptance, waiver, and consent action (AWC) Wells Fargo Advisors, LLC (Wells Fargo) broker Joseph DiRago Jr. (DiRago) concerning allegations that between June 2011, and October 2012, while registered with Morgan Stanley & Co. LLC (Morgan Stanley), DiRago effected transactions exercising discretion without written authorization in one customer’s account in violation of NASD Conduct Rule 2510(b) and FINRA Rule 2010.
In addition, DiRago has been the subject of at least five customer complaints over the course of his career. These claims primarily involve claims of unsuitable investment recommendations and misrepresentations. All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. The number of complaints made by investors against DiRago is relatively large by industry standards. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must disclose different types of events, not necessarily all of which are customer complaints. These disclosures can include IRS tax liens, judgments, and even criminal matters.
According to FINRA, NASD Conduct Rule 2510(b) provides that brokers cannot exercise any discretionary power in a customer’s account unless such customer has given prior written authorization and the account has been accepted by the firm as evidenced in writing by the member.