Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Matthias O’meara (O’meara), previously associated with BB & T Securities, LLC, has at least one disclosable event. These events include one regulatory, alleging that O’meara recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint on October 15, 2024.
The Securities and Exchange Commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Choice Advisors, LLC (‘Choice’) and Matthias O’Meara (collectively Respondents). The Divison of Enforcement alleges that on September 22, 2021, the Commission filed a Complaint against Choice and O’Meara in the United States District Court for the Southern District of California in a civil action entitled Securities and Exchange Commission v. Choice Advisors, LLC and Matthias O’Meara,Case No. 21-cv-01669. The Complaint alleged that in May 2018, O’Meara left his employment at a national municipal underwriting firm to start Choice, a new municipal advisor focused on charter schools. While O’Meara was in the process of leaving the underwriting firm, he entered into an impermissible fee-splitting arrangement with the firm, by making an agreement for Choice to split the underwriter’s fees for upcoming bonds involving Choice’s municipal advisory clients. O’Meara then proceeded to improperly operate in a dual capacity with respect to two charter school clients, simultaneously acting as a registered representative for the underwriting firm, and also as a municipal advisor purporting to serve as his two clients’ fiduciary. Moreover, Choice and O’Meara unlawfully engaged in municipal advisory activities when Choice was not registered with the Commission or the MSRB. O’Meara and Choice then failed to disclose to their clients the conflicts of interest created by O’Meara’s dual role and by Choice’s unregistered status. The Complaint alleged that this misconduct violated the federal securities laws, including violations by both Respondents of Sections 15B(c)(1) of the Exchange Act and MSRB Rules G-17 and G-42, and further violations by Choice of Section 15B(a)(1)(B) of the Exchange Act and MSRB Rule A-12. On April 15, 2024, the Court granting the Commission summary judgment on six of its claims, and denying Choice and O’Meara’s motion in its entirety. Specifically, the Court found that Respondents breached their fiduciary duties to their clients by failing to disclose their unregistered status and O’Meara’s simultaneous employment with the underwriting firm and Choice, in violation of Section 15B(c)(1) of the Exchange Act and MSRB Rule G-42. The Court also ruled that Respondents’ impermissible fee-splitting arrangement with the underwriting firm violated MSRB Rule G-42. The Court further held that Respondents violated MSRB Rule G-17 by failing to deal fairly with their clients. In addition, the Court ruled that Respondents unlawfully engaged in unregistered municipal advisory activity, and that Choice failed to register with the Commission and the MSRB in violation of Section 15B(a)(1)(B) of the Exchange Act and MSRB Rule A-12. Additionally, the Court found that Respondents’ violations of the MSRB rules constituted violations of Section 15B(c)(1) of the Exchange Act’s prohibition against engaging in municipal advisory activity in contravention of any MSRB rule. On September 24, 2024, as amended October 7, 2024, the Court entered a final judgment against Choice and O’Meara. Among other things, the final judgment permanently enjoined Choice and O’Meara from future violations of Section 15B(c)(1) of the Exchange Act, and MSRB Rules G-17 and G-42. The final judgment further permanently enjoined Choice from future violations of Section 15B(a)(1)(B) of the Exchange Act and MSRB Rule A-12. The final judgment also imposed the following monetary remedies: O’Meara, disgorgement in the amount of $133,149 and prejudgment interest in the amount of $45,932; Choice, disgorgement in the amount of $79,889 and prejudgment interest in the amount of $27,559; O’Meara, a civil penalty of $133,149; and Choice, a civil penalty of $79,889.
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. 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 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.
O’meara has been in the securities industry for more than 8 years. O’meara has been registered as a Broker with Bb & t Securities, LLC since 2014.
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.
