Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker John Abolarin (Abolarin), currently associated with PFS Investments Inc., has at least 2 disclosable events. These events include 2 tax liens, alleging that Abolarin recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 08, 2024.
On September 4, 2024, without admitting or denying the findings, Abolarin entered into an Acceptance, Waiver and Consent (“AWC”) with FINRA wherein Abolarin consented to the entry of findings that between April 2017 and May 2024, without providing prior written notice to his firm, Abolarin formed an LLC and operated an information-technology consulting business, which was his primary source of income and on which he spent most of his working hours. For several months in 2021, Abolarin also owned and operated an e-commerce storefront business though the same LLC, again without providing notice to his firm. On multiple annual compliance questionnaires, Abolarin inaccurately affirmed that he had disclosed his outside business activities to his firm. Abolarin agreed to a one-month suspension from associating with any FINRA member in all capacities but no monetary sanctions were imposed against Abolarin due to his financial condition.
FINRA BrokerCheck shows a final customer complaint on September 06, 2024.
Without admitting or denying the findings, Abolarin consented to the sanction and to the entry of findings that he engaged in OBAs without providing prior written notice to his member firm. The findings stated that Abolarin formed an LLC through which he operated an information-technology (IT) consulting business. Abolarin’s IT consulting work was his primary source of income, and he spent most of his working hours on this outside business. Moreover, Abolarin owned and operated an e-commerce storefront business through this same LLC, again without providing any notice to his firm. Abolarin’s e-commerce storefront business offered products for sale to the public on an established e-commerce platform. In addition, Abolarin inaccurately affirmed on multiple annual compliance questionnaires that he had completely and accurately disclosed his OBAs to the firm. It was not until approximately seven years after he formed the LLC, that Abolarin submitted a written form disclosing his outside business activities to his firm.
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 a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or 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. Finally, the financial advisor must use their knowledge of both their reasonable diligence into investment options as well as their knowledge of the investor’s client specific needs to consider reasonably available investment options. Those investment options must allow the broker to determine that there is a reasonable basis that the recommendation is in the retail 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.
Abolarin entered the securities industry in 1995. Abolarin has been registered as a Broker with PFS Investments Inc. since 2004.
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.
