Tag Archives: Colorado advisor fraud

Diones LaCerte Investment Fraud Investigation

We are currently investigating the actions of Colorado Springs broker Diones LaCerte.  Ms. LaCerte was most recently a financial advisor for Morgan Stanley.  If you information or would like to discuss a potential claim that you have concerning Ms. LaCerte, please call 303-300-5022 in Colorado or 1-866-817-0201 outside of Colorado to speak to a Colorado licensed attorney.

Ms. LaCerte has recently been alleged by FINRA regultators to have committed significant fraud. Between July 1,2012 and December 31,2014, LaCerte engaged in an unsuitable pattern of short-term trading of Unit Investment Trusts (“UITs”) in 107 of her customers’ accounts.  This is a significant type of fraud perpetrated on a large number of investors.   Diones LaCerte settled the charges without admitting or denying fault.

The actions of LaCerte constitute an unsuitable pattern of short term trading of UITs in 107 customer accounts. This is similar to churning an account.  Short term trades of a high commission and high cost investment puts the advisor’s financial gain ahead of that advisor’s investors.

UITs typically carry significant upfront charges, such as costs and commissions, and as with mutual funds, short-term trading of UITs is generally improper. During the Relevant Period, in connection with these 107 customer accounts, LaCerte repeatedly recommended that the customers purchase UITs and then sell these products well before their maturity dates.

The primary issue brought by FINRA concerns the selling of UITs less than two years after purchase.  The majority of the UlTs that LaCerte recommended had maturity dates of at least 24 months. Nevertheless, LaCerte repeatedly recommended that her customers sell their UIT positions less than one year after purchase. Indeed, the average holding period for the UITs purchased in these customers’ accounts was less than 300 days. In addition, on more than 100 occasions, LaCerte recommended that her customers use the proceeds from the short-term sale of a UIT to purchase another, similar UIT. LaCerte’s recommendations caused the customers to incur unnecessary sales charges, and were unsuitable in view of the frequency and cost of the transactions.

Diones LaCerte has a significant history of customer complaints prior to the current regulatory action.  The CRD of Ms. LaCerte, the record a financial advisor has with FINRA regulators, indicates that she has received many customer complaints concerning the sale of unsuitable investments, and these complaints have led to five investor lawsuits brought or threatened in the past three years.