Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Michael Maclean (Maclean), currently associated with Grove Point Investments, LLC, has at least 2 disclosable events. These events include 2 tax liens, alleging that Maclean recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on April 02, 2024.
The Enforcement Section of the Missouri Securities Division alleges an action that constitutes sufficient grounds to discipline Respondent in accordance with Section 409.4-412(c)
FINRA BrokerCheck shows a final customer complaint on November 27, 2023.
Without admitting or denying the findings, MacLean consented to the sanctions and to the entry of findings that he caused his member firm to maintain inaccurate books and records by changing the representative code for trades in the firm’s order entry system, causing the trade confirmations to show an inaccurate representative code. The findings stated that MacLean entered into an agreement through which he and another representative working from the same branch office agreed to service certain customer accounts, including executing trades for those accounts, under a joint representative code that they shared with a retired representative. The agreement set forth what percentages of the commissions MacLean, the other representative, and the retired representative earned on trades placed using the joint representative code. MacLean placed trades in accounts that were covered by the agreement using a representative code other than the one he should have used. Specifically, although his firm’s system prepopulated the trades with the applicable joint representative code, MacLean changed the code for the trades to a different representative code that he shared only with the other representative. MacLean changed the codes because he mistakenly believed that his agreement with the retired representative did not apply to new assets added to accounts subject to the agreement. The firm’s trade confirmations for the trades inaccurately reflected the representative code that MacLean shared only with the other active representative. MacLean’s actions resulted in his receiving higher commissions from the trades than what he was entitled to receive pursuant to the agreement. MacLean’s firm later reimbursed the retired representative.
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. Accordingly, a brokerage firm may not rely blindly upon the issuer for information concerning a company in lieu of conducting its own reasonable investigation.
To protect investors, it should be required to mandate broker disclosures. Brokers are required to report events to FINRA, such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters, as shown on their BrokerCheck reports. 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.
Maclean entered the securities industry in 2008. Maclean has been registered as a Broker with Grove Point Investments, LLC since 2021.
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.
