Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker David Rollins (Rollins), currently associated with Stonex Securities Inc., has at least 2 disclosable events. These events include one customer complaint, one tax lien, alleging that Rollins recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 31, 2024.
Without admitting or denying the findings, Rollins consented to the sanctions and to the entry of findings that he improperly used customer securities and funds by transferring approximately $12,000 in cash and approximately $200,000 worth of securities from his minor daughter’s Uniform Trust Minor Account (UTMA) to his brokerage account. The findings stated that Rollins, as custodian of his daughter’s UTMA account, was required to keep the custodial property separate from all other property. However, Rollins submitted a letter of authorization, requesting his member firm transfer the funds and securities in his daughter’s UTMA account to his brokerage account and close the UTMA account. The next month, Rollins sent an email to the firm explaining that he planned to establish a trust for the benefit of his daughter within the calendar year. After receiving approval from the firm, Rollins transferred the cash and securities to his brokerage account. Subsequently, Rollins sold shares of stock previously held in his daughter’s UTMA account. Almost 5 years later, Rollins established an irrevocable trust for the benefit of his daughter. After establishing the irrevocable trust, Rollins transferred approximately $107,000 in cash and all the remaining shares of stock previously held in the UTMA account worth approximately $105,000, from his brokerage account to his daughter’s trust.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $75,000.00 on July 31, 2023.
Civil litigation filed June 23, 2023 alleges David Rollins violated his fiduciary duty required on his daughter’s UTMA account established June 2012. He breached his fiduciary duty when he requested the funds from the UTMA account be transferred to his personal account on February 13, 2017.
When your financial advisor is providing advice they must adhere to the SEC’s Regulation Best Interest (Reg BI) rule and standard of care. Reg BI replaced the former ‘suitability’ rule and created a ‘best interest’ standard for brokerage firms and registered representatives. This Reg BI standard of care applies to registered representatives making recommendations to customers in the purchase, sale, or exchange of securities or the implementation of investment strategies involving securities and non-securities. The rule also applies to the handling of opening accounts such as account transfers and types of accounts being recommended to be opened. 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.
Rollins entered the securities industry in 2011. Rollins has been registered as a Broker with Stonex Securities Inc. since 2012.
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.
