Walter Charles Bish, a Macon, Georgia-based stockbroker with Smith Brown Groover Inc., consented to sanctions imposed by Financial Industry Regulatory Authority (FINRA) on November 6, 2024. From July 2014 to February 2018, Bish recommended a trading strategy involving a non-traditional, volatility-linked exchange-traded notes (ETNs) without fully understanding its features or risks. Letter of Acceptance, Waiver, and Consent (AWC) No. 2019063352403.
The ETN, a high-risk product designed for short-term trading, was unsuitable for retail investors holding it beyond a single trading session. Bish failed to conduct necessary due diligence or understand critical risks, including potential acceleration or termination of the ETNs.
FINRA’s findings indicate that Bish recommended the trading strategy developed by another representative at his firm. The strategy, designed to generate returns during periods of declining market volatility, relied heavily on the high-risk ETNs. Bish, however, lacked sufficient understanding of the product’s inherent risks, including its tendency to lose value over time and its unsuitability as a buy-and-hold investment. The ETN’s prospectus explicitly warned against long-term holding due to its design as a short-term risk management tool. Bish’s failure to adequately assess the product’s risks rendered his recommendations unsuitable under FINRA Rule 2111’s reasonable-basis obligation.
As a result, Bish violated FINRA Rules 2111 and 2010. The disciplinary action imposed a three-month suspension, effective December 2, 2024, and a $5,000.00 fine, which Bish paid in full on November 15, 2024.
This regulatory action followed a customer initiated investment related securities arbitration claim filed with FINRA on May 23, 2019. The customer alleged negligence, unsuitable investment recommendations, fraud, and breaches of fiduciary duty regarding volatility-linked products and variable annuities. The case, which involved investments dating back to July 2008, culminated in a settlement of $425,000.00 on December 20, 2022. FINRA Arbitration No. 19-01344.
Bish has been associated with Smith Brown Groover since May 5, 1999.
