Christopher J. Elliott, of Washington, District of Columbia, a stockbroker with Infinex Securities, Inc., was fined $7,500.00 and suspended for two years from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he engaged customers in unsuitable recommendations and acted with unauthorized discretion in customers’ accounts. Letter of Acceptance, Waiver and Consent, No. 2013037483101 (Mar. 23, 2016).
According to the AWC, from December 2012 through May 2013, three customers received a total of one-hundred and fifty recommendations by Elliott to purchase investments in inverse and inverse-leveraged exchange traded notes (ETNs) and exchange traded funds (ETFs).
Apparently, Elliott made such recommendations notwithstanding the investments not conforming to his customers’ investment objectives, low risk tolerances, and financial situations. Elliott was reportedly apprised of such customers’ suitability information pursuant to their account profiles, yet disregarded such information.
The AWC stated that Elliott additionally held such investments in customers’ accounts for a prolonged period of time (apparently one month) when such short-term investments were not designed for such extended holding periods. The AWC stated that customers lost an estimated $28,450.00 in the aggregate as a result of the investments in the non-traditional ETFS and ETNs that Elliott recommended. Consequently, FINRA found that Elliott violated FINRA Rules 2010 and 2111 for making unsuitable recommendations to the firm’s affected customers.
The AWC further reported that Elliott engaged in the unauthorized discretionary trading of two of his customers’ accounts. Elliott reportedly had no written authorization from such customers prior to exercising discretion. Additionally, his firm’s policies had not allowed Elliott to engage in discretionary trading, and never accepted the customers’ accounts as discretionary. FINRA found that Elliott had violated FINRA Rule 2010 and NASD Conduct Rule 2510(b) as a result of his unauthorized discretionary trading.
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