Securities Lawyers Blog
Broker, John Marshall, currently employed at Centaurus Financial. Inc., (Centaurus) has been subject to at least two customer complaints during the course of his career. Both complaints allege Marshall of making unsuitable trading recommendations.
According to a BrokerCheck report, in September 2019, a customer alleged that from 2004 through 2019 misrepresented unsuitable investments and breached his fiduciary duty. The matter settled for $55,000. Moreover, in December 2018, another customer alleged that Marshall recommended unsuitable investments throughout the period of November 2012 through August 2018. The matter is still pending and the customer is seeking damages in the amount of approximately $336.000.
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.