Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Azmi Sharif (Sharif), previously associated with Kcd Financial, Inc., has at least 2 disclosable events. These events include 2 tax liens, alleging that Sharif recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint on February 02, 2025.
While registered as an investment advisor in the state of Illinois, Azmi Sharif entered into a Letter of Acceptance, Waiver and Consent (“AWC”) with FINRA a self-regulatory organization registered under Federal Act. Pursuant to AWC No. 2022076175702, on June 11, 2024. Azmi Sharif violated Rules 3280 and Rule 2010, based upon the following facts. Azmi Sharif was a founding investor and employee in a crypto asset mining company. In February, 2022, he and his partner Sharif Sharif held a meeting with LPL customers concerning investment in the company. Both investors and investor family members collectively invested approximately $900,000 in securities known as SAFEs (simple agreements for future equity). The investments were, among other things, the purchase of crypto asset mining equipment. LPL was notified of the transaction. The FINRA AWC resulted in a nine month suspension from associating with any FINRA member in all capacities. The current action seeks revocation in Illinois based upon the FINRA AWC
FINRA BrokerCheck shows a final customer complaint on June 26, 2024.
Without admitting or denying the findings, Sharif consented to the sanctions and to the entry of findings that he participated in private securities transactions by facilitating the investment of approximately $900,000 by eight individuals, including seven customers of his member firm without providing prior written notice to the firm. The findings stated that Sharif was a founding investor and employee in a crypto asset mining company. Sharif and his business partner held an approximately one-hour video call with four firm customers to explore a potential investment by the customers in the company. During the call, Sharif explained the business model of the company, the amount the company was hoping to raise, the minimum investment, potential returns, and answered questions relating to the company. Subsequently, the customers and four of their family members, three of whom were also firm customers, collectively invested approximately $900,000 in securities. The investments were for, among other things, the purchase of crypto asset mining equipment. Sharif did not notify the firm of the transactions. Before the company was able to reach its funding goal, it changed its business model, and the customers complained to the firm. All seven customers either received refunds from, or otherwise settled with, the issuer. Sharif received no selling compensation in connection with his participation in the transactions
Brokers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) standard of care under the Securities Exchange Act of 1934 which establishes a ‘best interest’ standard for broker-dealers and associated persons. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types of accounts. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest.
In addition to specific investments being recommended, under Reg BI, a broker must also understand the type of account that their client would need in order to meet their care obligations. The SEC has stated that the type of securities account an investor has can greatly affect a customers’ costs and overall investment returns. Further, different account types can offer and support different features, products, securities, or services, and account type would not be appropriately applied in a one size fits all manner.
Sharif has been in the securities industry for more than 7 years. Sharif has been registered as a Broker with Kcd Financial, Inc. since 2023.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
