Mehran Tazhibi, of Berkeley, California, a stockbroker formerly registered with Merrill Lynch, Pierce, Fenner & Smith Incorporated, has been fined $10,000.00 and suspended for two months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded upon consenting to findings that he made unsuitable recommendations to customers regarding municipal bonds. Letter of Acceptance, Waiver and Consent, No. 2016048911301 (Sept. 13, 2017).
According to the AWC, in July of 2013, unsuitable investment recommendations were made by Tazhibi to two Merrill Lynch customers, JS and DS. Apparently, JS and DS were persuaded by Tazhibi to invest $135,000.00 in municipal revenue bonds issued by California Statewide Communities Development Authority. The AWC reported that the bonds, which were slated to fund a law school in San Diego, California, contained an October 2013 maturity and were supposed to pay 7.25 percent to investors on an annual basis.
Critically, the AWC stated that the bond issuer intended the investments to be purchased by institutional investors instead of retail customers like JS and DS. The offering documents reportedly indicated that some investors would not be suitable for the investments given the risk factors. Apparently, certain entities were described in the offering documents as being an approved investor, such as investment and insurance companies or other companies investing at least $100,000,000.00 in securities.
The AWC reported that the California Statewide Communities Development Authority Bond was downgraded in July of 2013 by Standard and Poor’s Rating Service, receiving a BB rating – a speculative credit rating.
The AWC revealed that Tazhibi failed to have an adequate reason to conclude that JS and DS were suitable investors based on the risk factors of the bond, the restrictions on sales to retail customers, and the fact the customers just entered retirement and maintained conservative amount of risk tolerance. FINRA indicated that Tazhibi made unsuitable investment recommendations to the customers as a result, and did not fairly deal with the customers. Consequently, FINRA found that Tazhibi’s conduct was violative of MSRB Rules G-17 and G-19.
FINRA Public Disclosure confirms that on February 22, 2017, a customer initiated investment related arbitration claim involving Tazhibi’s conduct was settled for $100,000.00 in damages founded upon accusations that Tazhibi made unsuitable municipal bond investment recommendations to the customer.
Tazhibi’s employment with Merrill Lynch, Pierce, Fenner & Smith was terminated as of October 23, 2014. From November 14, 2014, to July 24, 2017, he was employed with Fidelity Brokerage Services LLC.
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
