Moloney Securities has been accused by the regulator overseeing securities brokerages of committing numerous sales practice violations. Certain advisors of this brokerage have also been repeatedly alleged to have committed securities violations. If you have questions about this issue, please contact us to speak to a private attorney for a free initial consultation. We are a firm that assists investors.
The most recent broker to suffer a customer complaint is Lorraine Gallette. Gallette has recently been alleged by an investor of selling unsuitable securities causing losses of $400,000. This is Gallette’s sixth customer complaint in the last three years. Additionally, Eric Duncan has been accused of inappropriately selling $1.4 million in GWG investments.
FINRA, the Financial Industry Regulatory Authority, is the regulator that oversees Moloney and other stock brokerages. Moloney has been accused by FINRA of not having sufficient supervision and failing to adequately investigate investments to ensure that they are consistent with the risk tolerance of conservative and moderate investors. This is a sales practice violation.
FINRA rules requires brokerage firms to have a reasonable basis to believe that a recommended securities transaction or investment strategy is suitable for the customer, based on the information obtained through the firm’s reasonable investigation concerning the customer’s investment profile. This means an investment must be conservative or moderate if the customer’s investment profile calls for conservative or moderate investments.
A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, investment objectives, investment experience, investment time horizon, need for retirement income, ability to re-earn investment losses through employment, liquidity needs, and risk tolerance.
An investment strategy can also be unsuitable if the strategy over-concentrates in a security or a type of security or a type of industry. Such concentration makes a portfolio much more aggressive and can make the investment inconsistent with the investment profile. For example, too high a concentration of stocks as opposed to bonds, or too high a concentration of energy investments can make a portfolio unsuitable.
During the Relevant Period, Moloney failed to establish and maintain a supervisory system, including written supervisory procedures reasonably designed to achieve compliance with FINRA’s suitability rule with respect to suitability and concentration in high-risk products. Moloney’s written procedures stated that each Regional Manager was responsible for conducting a daily review of all trades executed by the registered representatives assigned to them.