Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Ginny Colarusso (Colarusso), currently associated with the Jeffrey Matthews Financial Group, L.l.c., has at least one disclosable event. These events include one customer complaint, alleging that Colarusso recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $20,000,000.01 on November 22, 2024.
Client began investing in cryptocurrency in December 2022 and January 2023 in legitimate sites. At the end of January 2023 he told his rep to liquidate his accounts as he had been too conservative all these years. His rep was against this idea as a bond portfolio takes years to build. He told her a story of billionaire investor friends that he did real estate deals with that told him that could triple his money. He claimed he was receiving statements as well had legal paperwork drawn up. We executed the wires on his request to the companies he designated. We researched the companies as well which were not listed on OFAC and were listed in the US. His rep also credited the wire fees for him as well as any account fee. This is a client with an accounting background that checks his accounts daily to the penny. I signed off on these wires as the Rep verified the wires were coming from the client directly. He started to experience issues when he tried to withdraw his money from this NFT platform. He was told he had to pay taxes and borrowed additional funds from his brother. At the time he was told he had made $100 million, and he gave his rep and her assistant directions as to what to do with the money when it was wired back in, this was April 2023. he then found out he was a victim of a pig butchering scam, and he had met a woman on Facebook who was helping direct his investments in which he began a relationship with during this time. We did not find out about her until April as well as the name of the NFT site, openraritypro.com a derision of Openrarity.com, which is a valid site and part of Opensea.com. Our clearing firm was able to retain a small amount from the wires as everything was reported as fraud.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Data on the investor and the expense of the advice are consistently part of material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. Thus, without conducting its own reasonable investigation, a brokerage firm cannot depend solely on the issuer for information about a company.
Another protective measure is to require broker discloses. Brokers are required to disclose reportable events such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters on FINRA’s BrokerCheck reports for public viewing. FINRA has recognized that recent studies indicate future regulatory and customer complaint issues can be predicted for brokers who have experienced them before. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Colarusso entered the securities industry in 2000. Colarusso has been registered as a Broker with the Jeffrey Matthews Financial Group, L.l.c. 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.
