Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Christopher Shaw (Shaw), previously associated with Newbridge Securities Corporation, has at least one disclosable event. These events include one tax lien, alleging that Shaw recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 23, 2024.
Without admitting or denying the findings, Shaw consented to the sanctions and to the entry of findings that he made unsuitable recommendations of alternative investments to senior customers. The findings stated that Shaw recommended and sold the management firm limited partnership interests to the customers, none of whom were accredited investors, for whom those investments were unsuitable in light of their investment profiles, including their annual incomes and net worths. In addition, as a result of Shaw’s recommendations, each customer’s combined holdings of alternative investments, including in the management firm, exceeded 30% of the customer’s liquid net worth. Shaw’s recommendations to purchase the management firm’s limited partnership interests to these customers were unsuitable based on the customers’ age, income, net worth, risk tolerance, and because they were not accredited investors. In addition, Shaw’s recommendations were unsuitable because they resulted in a level of concentration of the customers’ liquid net worth in alternative investments that was not suitable for their investment profiles. Subsequently, the SEC filed a complaint against the management firm and others alleging, among other things, that the defendants engaged in securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. (Case No. 1:21-cv-00583, E.D.N.Y.). The United States Department of Justice also brought criminal charges against the management firm’s founder and CEO and two other executives, charging, among other things, securities fraud, mail fraud and wire fraud. (Case No. 1:21-cr-54, E.D.N.Y.). Later, one of the management firm’s former executives pled guilty to wire fraud. Ultimately, a federal jury found the management firm’s founder and CEO, along with the other former executive, guilty on all counts.
In the financial industry advisors must meet the requirements of the SEC’s Regulation Best Interest (Reg BI) in providing investment advice and services. Reg BI established a ‘best interest’ standard for brokerage firms and registered representatives. Reg BI applies when brokers recommend a retail investor engage in securities transaction or an investment strategy involving one or more securities. Reg BI also applies to financial advice concerning the transfer of funds and opening 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 different sub-parts of the Reg BI rule that financial professionals must comply with when providing advice. Among those is the duty of care obligation that mandates associated persons to evaluate investment options, review and be knowledgeable the risks and rewards of the investment or service, compare alternative investment products, and ensure that the overall investment strategy aligns with the client’s goals and is in their best interests.Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonable understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. 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.
An advisor must understand the type of account, securities, and their client in order to meet their care obligations. The type of securities account has the potential to greatly affect retail customers’ costs and investment returns. Different types of securities accounts can offer different features, products, or services, and not all types of accounts or services would be in every investor’s best interest.
Shaw has been in the securities industry for more than 16 years. Shaw has been registered as a Broker with Newbridge Securities Corporation since 2020.
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.
