Stockbroker Fraud Lawyers | Scott F. Goldman, of Arlington Heights, Illinois, a stockbroker formerly associated with LPL Financial LLC, was fined $10,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity based upon consenting to findings that he made unsuitable investment recommendations to customers. Letter of Acceptance, Waiver and Consent, No. 2013036819901 (Dec. 19, 2016).
According to the AWC, in 2009 and 2010, six investment strategies which were referred to as Champion Models had been utilized by Goldman within customer accounts. Apparently, these models called for customers’ funds to be invested by Goldman in mutual funds or variable annuity subaccounts, where each of the strategies contained varying levels of risk.
The AWC stated that discretion had been obtained from Goldman’s customers for purposes of allowing Goldman to effect trades of mutual funds and annuity subaccounts conditioned upon certain market events that Goldman observed. Apparently, the riskiest strategy imposed by Goldman was a Champion Precious Metals Model – which consisted of a substantial concentration of customer assets in precious metals.
The AWC reported that from 2009 to 2010, Goldman advised a customer to invest in the Champion Precious Metals Model with monies the customer accumulated independently as well as through inheritance from the customer’s late husband. Apparently, the customer utilized $135,000.00 for purposes of investing with Goldman, in which the proceeds were placed into the PM Fund – a precious metals leveraged mutual fund, as well as a variable annuity subaccount which had leveraged precious metal fund exposure.
The AWC revealed that by May of 2010, the customer deposited an additional $188,219.00 with Goldman for purposes of investing in the PM Fund pursuant to the Champion Precious Metals Model. By this time, the customer reportedly had nearly fifty-three percent of her overall assets invested pursuant to the Champion Precious Metals Model.
FINRA found that Goldman’s recommendations regarding the Champion Precious Metals Model were not suitable for the customer. Particularly, FINRA took issue with the fact that the customer’s assets were overly concentrated in products which were risky and leveraged, and focused solely in the precious metals sector. FINRA found that Goldman’s conduct in this regard was violative of NASD Rule 2310.
The AWC also revealed that Goldman’s recommendation concerning the customer’s 2009 investment in the variable annuity subaccount was unsuitable. Specifically, FINRA found that the customer’s needs and financial circumstances were not consistent with Goldman’s implemented strategy. The customer, according to FINRA, was not reasonably apprised of the subaccount’s features and risks. Accordingly, FINRA found that Goldman’s conduct was violative of NASD Rule 2821. Goldman was also found to have violated FINRA Rule 2010 because of his aforementioned conduct.
FINRA Public Disclosure reveals that Goldman has been named in six customer arbitrations. Particularly, on July 15, 2004, a customer filed an investment related arbitration claim involving Goldman’s conduct, in which the customer requested $76,000.00 in damages based upon allegations that Goldman failed to disclose the risk factors associated with an investment, causing the customer to sustain losses.
Subsequently, on January 28, 2011, a customer filed an investment related arbitration claim concerning Goldman’s actions, in which the customer requested $26,049.49 in damages upon allegations that Goldman made misrepresentations to the customer concerning investments.
On June 13, 2012, a customer initiated investment related arbitration action regarding Goldman’s conduct was settled for $20,000.00 in damages based upon allegations that Goldman made omissions and misrepresentations to the customer concerning investments. Further, on December 26, 2012, a customer initiated investment related arbitration claim regarding Goldman’s conduct was settled for $200,000.00 in damages based upon allegations that from 2009 through 2012, Goldman effected unsuitable investments transactions in the customer’s account.
On October 13, 2014, another customer initiated investment related arbitration claim involving Goldman’s actions was settled for $75,000.00 in damages based upon allegations that Goldman, while registered with H Beck Inc., breached his fiduciary obligation to the customer, effected unsuitable transactions and made misrepresentations concerning a variable universal life policy. The customer additionally alleged that H Beck Inc. failed to supervise Goldman’s activities.
Moreover, on November 14, 2014, a customer filed an investment related arbitration action concerning Goldman’s conduct, in which the customer requested $53,858.35 in damages based upon allegations that Goldman made unsuitable investment recommendations concerning a variable annuity investment.
Goldman’s registration with LPL Financial LLC ended in December 31, 2009. From January of 2010 to May of 2016, he was registered with H. Beck, Inc. Since May of 2016, Goldman has been registered with Cambridge Investment Research, Inc.
Guiliano Law Group
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