Securities Lawyers Blog
Our investment attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Michael DiGaetano (DiGaetano) currently associated with Independent Financial Group, LLC (Independent Financial) alleging unsuitable investments, misrepresentations, fraud, negligence, breach of contract, and breach of fiduciary duty among other claims. According to brokercheck records DiGaetano has been subject to three customer complaints and one regulatory sanction.
In May 2012 FINRA sanctioned DiGaetano alleging that as a supervisor he failed in responsibilities by not taking reasonable action to prevent another broker from committing securities fraud. (FINRA No. 2009019209202) As part of the claim, FINRA alleged that DiGaetano failed to even contact customers who were subject to fraudulent mutual fund switches and never questioned the broker involved even though the trades were marked as unsolicited.
Brokers in the financial industry have the fundamental responsibility to treat investors fairly. This obligation includes making only suitable investments for their client. The suitable analysis has certain requirements that must be met before the recommendation is made. First, there must be reasonable basis for the recommendation for the investment based upon the broker’s and the firm’s investigation and due diligence. Common due diligence looks into the investment’s properties including its benefits, risks, tax consequences, the issuer, the likelihood of success or failure of the investment, and other relevant factors. Second, if there is a reasonable basis to recommend the product to investors the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives. These factors include the client’s age, investment experience, retirement status, long or short term goals, tax status, or any other relevant factor.