Gary Bruce Weiss, of Farmingdale, New York, a chief operating officer formerly registered with Salomon Whitney Financial, has been fined $5,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he failed to supervise a stockbroker that made unsuitable investment recommendations to a customer. Letter of Acceptance, Waiver and Consent, No. 2015043645101 (Dec. 15, 2017).
According to the AWC, between December of 2011 and December of 2015, it was Weiss’ responsibility to supervise LF – a stockbroker associated with Salomon Whitney Financial. The AWC stated that it was incumbent upon Weiss to review and authorize the mutual fund recommendations made by LF.
Apparently, in April of 2015, an individual retirement account was opened by customer HR at Salomon Whitney Financial, in which LF was responsible for advising HR with respect to his investments. Apparently, the new account documentation provided by HR stated that HR expected to invest on a short-term basis, with an objective to preserve capital in anticipation of HR’s upcoming retirement.
Subsequently, in May of 2015, HR reportedly transitioned his outside mutual fund holdings to Salomon Whitney Financial, in which HR had been initially invested in class A mutual fund shares.
However, three days after HR moved his assets to Salomon Whitney Financial, LF recommended that HR sell his $865,000.00 in mutual fund holdings to buy class A shares of fourteen mutual funds belonging to twelve separate mutual fund families.
The AWC stated that LF’s investment recommendations were not suitable for the customer for several reasons. Particularly, the new funds that LF recommended had stated objectives of capital growth and appreciation, which was inconsistent with the capital preservation objectives that HR communicated to LF through HR’s new account documentation. Additionally, those class A shares were designed for investors maintaining longer term investment horizons when HR only intended on investing on a short-term basis. Further, HR was unable to gain the benefit of breakpoint discounts based upon his assets having been allocated among twelve separate families of mutual funds.
According to the AWC, during the time that LF’s investment recommendations were subject of Weiss’ review, Weiss reportedly neglected to make sure that the objectives of the new mutual funds LF recommended were on par with the investment objectives stated by HR within HR’s new account documentation. Further, Weiss failed to ensure that the funds recommended by LF were reasonable given HR’s plans to invest in the short term. Further, Weiss failed to see that HR would generate the breakpoint discount benefit.
Moreover, Weiss reportedly failed to ensure that the appropriate information relating to sales charges on the recommended funds had been conveyed to HR within the mutual fund switch letters transmitted by LF. The AWC further stated that Weiss did not possess an adequate foundation of mutual funds knowledge in order to adequately supervise the transactions that LF prompted for R. Weiss evidently had no clue about the impact front-end sales charges would have on suitability of transactions, nor did he understand the concept of breakpoint discounts. Consequently,
FINRA found that Weiss’ supervisory failures were violative of FINRA Rules 2010 and 3110.
FINRA Public Disclosure reveals that Weiss has been identified in two customer initiated investment related disputes that pertain to accusations of his misconduct while employed with Salomon Whitney Financial. Particularly, a customer initiated investment related arbitration claim regarding Weiss’ activities was settled for $75,000.00 in damages based upon accusations of unauthorized margin use and trading of equities in the customer’s investment portfolio. FINRA Arbitration No. 15-00570 (Feb. 9, 2016).
Thereafter, a customer initiated investment related arbitration claim involving Weiss’ conduct was settled for $125,000.00 in damages based upon allegations of unauthorized trading, churning, suitability, and failure to supervise options, stock and over-the-counter equities transactions in the customer’s account. FINRA Arbitration No. 14-02534 (July 1, 2016).
Weiss’ registration with Salomon Whitney Financial was terminated as of December 15, 2015. He has been associated with fifteen different broker dealers, fourteen of which were expelled by securities regulators for violation of federal securities laws or are otherwise defunct. #cockroach
The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.
This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship. Attorney Advertisement. See Important Disclaimer
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
