Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Spencer Huggett (Huggett), currently associated with Cetera Advisor Networks LLC, has at least 2 disclosable events. These events include 2 tax liens, alleging that Huggett recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on November 25, 2024.
Mr. Huggett engaged in prohibited conduct by causing his firm to maintain inaccurate books and records. These acts included using his own email address in place of clients’ email addresses and with client permission and authorization electronically signed client documents on behalf of clients inv violation of ARSD 20:08:03:02 and FINRA Rules 2010 and 4511.
FINRA BrokerCheck shows a final customer complaint on September 09, 2024.
Without admitting or denying the findings, Huggett consented to the sanctions and to the entry of findings that he falsified the electronic signatures of customers on account documents. The findings stated that Huggett electronically signed, with prior permission, the names of 13 customers on a total of 29 account documents. Two of the customers were seniors. The documents signed by Huggett, which included new account applications and move money forms, were required books and records of his member firm. As a result, Huggett caused the firm to maintain inaccurate books and records. None of the customers complained and the transactions were authorized. In addition, Huggett falsely attested to the firm in compliance questionnaires that he had not signed or affixed another person’s signature on a document.
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. The cost of the recommendation and information about the investor are always included in 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. So, a brokerage firm should not depend solely on information from the issuer regarding a company, but must perform its own thorough investigation.
To protect investors, it should be required to mandate broker disclosures. FINRA requires the broker to disclosure events such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters on their public BrokerCheck reports. FINRA has recognized that recent research shows past regulatory and customer complaint issues can indicate future problems for brokers. 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.
Huggett entered the securities industry in 2002. Huggett has been registered as a Broker with Cetera Advisor Networks LLC 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.
