Richard Alan Shotz, of Ormond Beach, Florida, a stockbroker formerly registered with Morgan Stanley, has been fined $7,500.00 and suspended for four months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity supported by consenting to findings that he placed short-term unit investment trust trades in customer accounts that were not suitable for the customers. Letter of Acceptance, Waiver and Consent, No. 2015048039501 (Jan. 16, 2018).
According to the AWC, from July 1, 2012 to December 31, 2014, Shotz made unsuitable investment recommendations affecting four-hundred and eighty-six of the firm’s customer accounts. Apparently, Shotz would recommend on a repeated basis that the firm’s customers buy unit investment trusts and then sell those products prior to them having matured.
The AWC stated that most of the unit investment trusts recommended by Shotz had two-year maturities and carried between 1.95 percent and 3.95 percent in sales charges. Apparently, Shotz disregarded the maturities of unit investment trusts, recommending that many customers sell their positions in under a year. Consequently, customers reportedly held unit investment trusts in their accounts for one-hundred and forty-three days on average.
The AWC further detailed that in one-thousand two-hundred occasions, recommendations were made by Shotz to take the proceeds from sales of unit investment trusts sold prematurely to buy other unit investment trusts containing matching objectives for investing. FINRA indicated that Shotz’s recommendations led the firm’s customers to pay sales charges that were not necessary. As a result of the high costs and rate in which transactions were effected, FINRA concluded that Shotz’s recommendations were not suitable for customers. Shotz’s conduct was found by FINRA to be violative of FINRA Rules 2010 and 2111, as well as NASD Rule 2310.
FINRA Public Disclosure reveals that Shotz has been identified in five more customer initiated investment related disputes pertaining to accusations of his misconduct while employed with Morgan Stanley and Citigroup. In particular, a customer initiated investment related written complaint involving Shotz’s conduct was settled for $15,254.64 in damages founded on allegations that the customer was led to believe that a Manulife insurance policy contained a guaranteed death benefit.
Additionally, on May 10, 2005, a customer filed an investment related written claim pertaining to Shotz’s activities, where the customer sought $6,400.00 in damages based upon accusations of misrepresentation relating to equity investments placed in the customer’s account. Further, on December 10, 2008, a customer filed an investment related written complaint regarding Shotz’s activities, in which the customer requested $30,000.00 in damages supported by allegations that Shotz effected mutual funds transactions in the customer’s account that were not suitable for the customer.
On December 3, 2009, another customer initiated investment related written complaint involving Shotz’s conduct was settled for $8,812.25 in damages founded on accusations that Shotz placed unsuitable exchange traded funds transactions in the customer’s investment portfolio. Thereafter, on October 3, 2011, a customer brought an investment related written complaint regarding Shotz’s activities, where the customer sought $25,000.00 in damages based upon allegations of misrepresentation relating to Fannie Mae preferred stock shares.
Shotz’s registration with Morgan Stanley was terminated on October 28, 2015. Since October 23, 2015, he has been employed with Wells Fargo Clearing Services, LLC.
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