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Broker suspended and fined for settling customer complaint

| Aug 25, 2020 | FINRA |

Because it is difficult to take dive right into an investment opportunity, many individuals in Pennsylvania and elsewhere will use a financial advisor to guide them through the process and discuss with them what options they have. Taking this step causes a person more ease, with the idea that the advice offered was sound and in their best interest. Unfortunately this does not always occur, as some advisors fail to do their due diligence or comply with the requests of their clients.

Failure to act with high standards of commercial honor

Based on recent reports, the Financial Industry Regulatory Authority fined and suspended a broker who formerly worked for a firm in Kansas. This occurred after the broker attempted to settle a customer complaint on his own. Supposedly, the broker wrote a check for $2,500 out of his personal account to resolve a complaint from a customer.

The customer complained that she lost money after the broker failed to close an account in time when the market began to tank in March. The broker was instructed to close the customer’s account by March 10; however, it was not closed until March 17. This delay resulted in a loss experienced by a customer, which would have been avoided had the broker acted in accordance with her instructions to close the account.

FINRA’s response

As a result of these actions, FINRA imposed a 10-day suspension for the broker. Additionally, he was fined $2,500 for violating the “catch-all Rule 2010, which states that a broker is required to act with high standards of commercial honor. FINRA stated that these sanctions are relatively light, likely reflecting that the broker had good intentions when he made his own settlement with the customer. However, because FINRA prohibits brokers from settling directly with clients, action needed to be taken.

Those dealing with issues stemming from a broker or financial advisor should understand that they might have options. If there has been a FINRA violation or, as a client, you have a complaint, it may be possible to take legal action. Doing so not only seeks resolutions for the problems but also ensures your rights are protected as well.