Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker David Slater (Slater), currently associated with Chelsea Financial Services, has at least 2 disclosable events. These events include 2 tax liens, alleging that Slater recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 27, 2025.
David Slater entered into an AWC with FINRA on August 30, 2024 regarding conduct that took place while registered with the Investment Center from 2014- 2022. There was no additional misconduct on the part of David Slater- The action from the California Insurance Commissioner is a Piggyback action of the FINRA AWC
FINRA BrokerCheck shows a final customer complaint on August 30, 2024.
Without admitting or denying the findings, Slater consented to the sanctions and to the entry of findings that he shared approximately $500,000 in commissions generated from securities transactions in his customers’ accounts with an unregistered person The findings stated that Slater paid an unregistered person half of the commissions he earned from his work at his member firm as part of a business partnership with that person, including insurance sales, unrelated to the securities industry. Slater and the unregistered person also communicated regarding potential securities recommendations for one or more brokerage customers and met jointly with at least one customer to discuss securities recommendations.
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.
Slater entered the securities industry in 1991. Slater has been registered as a Broker with Chelsea Financial Services since 2022.
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.
