Securities Lawyers Blog
According to BrokerCheck records Michael Spolar (Spolar), now associated with International Assets Advisory, LLC (IAA), has been sanctioned by The Financial Industry Regulatory Authority (FINRA) over allegations that Spolar exercised discretion in customers’ accounts that were non-discretionary accounts. Since according to FINRA Spolar did not obtain written authorization from these customers to exercise discretion in their accounts and his member firms did not approve these accounts for discretionary trading, these trades were unauthorized. FINRA found that while Spolar stated that he discussed strategy with these clients and he received verbal authority for the trades. However, when the firm discovered the activity Spolar was terminated. FINRA also found that when Spolar moved to a different brokerage firm he continued to exercise discretion in customer accounts despite his prior termination for the same conduct.
In addition to the FINRA sanctions Spolar has been subject to eight customer complaints, one termination, and one financial disclosures including a bankruptcy filing in December 2015. Some of the complaints against Brodt allege securities law violations including that the broker engaged in unauthorized trading among other claims.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. 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.