Articles Posted in Best Interest

Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential securities arbitration claims against Western International Securities, Inc. and its Pennsylvania-based broker, Heath Goldstein, for its sale of L Bonds issued by GWG Holdings, Inc. Western International Securities was part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds to retail investors.

GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022.

According to court filings, in the four years before the bankruptcy filing, Western International Securities received at least $3 million in commissions from GWG Holdings for selling L Bonds to retail investors, and the firm sold approximately $13.3 million in L Bonds to retail investors between June 2020 and January 2022.

On January 30, 2023, the United States Securities and Exchange Commission (“SEC”) published a Risk Alert including its observations from Broker-Dealer Examinations Related to Regulation Best Interest (“Reg BI”).  The risk alert highlights deficiencies observed during regulatory examinations, as well as weak practices by broker-dealers that could result in deficiencies.

Reg BI requires that brokerage firms and brokers act in the best interest of a retail customer at the time of a recommendation to purchase, sell, or hold a security or investment strategy.  The broker-dealer and broker must place their retail customers’ interest ahead of their own financial interest.  The standard of care also applies to recommendations of account types.

Reg BI requires compliance with four component obligations:

On September 14, 2022, Western International Securities, Inc. filed its Answer to the Securities and Exchange Commission’s Complaint denying that the firm violated the standards under Regulation Best Interest (“Reg BI”) in approving, recommending, and supervising the sale of speculative, high-risk, and illiquid L Bonds issued by GWG Holdings, Inc.

The case, which is being litigated in the United States District Court of the Central District of California, is being closely watched by investors and the securities industry alike because it is the first substantive enforcement action brought by the SEC against a broker-dealer since Reg BI went into effect on June 30, 2020.

See AlsoLaw Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

In an annual report more than two decades ago, Warren Buffett dispensed some wise words of knowledge: “You only find out who is swimming naked when the tide goes out.Reportedly, Mr. Buffett was referring to knowing what risks a company is taking until it faces adverse conditions.  Mr. Buffett used the same phrase again in 2008 about the foolishness of large financial institutions exposed by falling home prices.

Mr. Buffett’s words of wisdom can also be applied to investment recommendations made by a financial advisor in a bull market.  Almost everyone looks like a genius in a booming market, including financial advisors.  However, when the stock market enters into a correction, or something even more dreadful, the real risks of an investment or investment strategy are exposed, often leaving a trail of investment losses in their wake.

Investors who have suffered investment losses due to unsuitable or misleading investment recommendations by brokers or brokerage firms should consult with a lawyer to review their legal rights.

You worked hard, opened a brokerage or retirement account, and invested your savings with a financial advisor or stockbroker, only to suffer financial losses due to bad investment advice, misleading sales pitches, or brokers that were driven by commissions.  Now what?

Can I Sue My Financial Advisor Over Losses?

Yes, you can sue your financial advisor or broker to recover investment losses if the broker did not have your best interest in mind when they made an investment recommendation or offered investment advice.  You can also sue your financial advisor or broker if the financial advisor misrepresented or omitted material facts that an investor should have known about the security or investment strategy.

As Joe Biden takes his place as the 46th President of the United States of America, House Financial Services Committee Chairwoman Maxine Waters, D-Calif., urges the Biden Administration to rescind Regulation Best Interest (Reg BI).

In a letter dated December 4, 2020, Rep. Waters outlined dozens of Trump-era regulations promulgated during the Trump administration that should be rescinded or replaced by the new administration.

Regulation Best Interest (Reg BI), which went into effect on June 30, 2020, establishes a standard of conduct for broker-dealers and brokers when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities. When a broker-dealer makes an investment recommendation, the investor is entitled to a recommendation that is in the investor’s best interest and does not place the interest of the financial professional or financial institution ahead of the retail investors’ interests.

Investing your money is a great way to grow your wealth, save for retirement, and reach your financial goals.  If you invest in the appropriate products, you can also receive income from investments, build on-pre-tax dollars, or reduce taxable income.

If you do not invest, you miss out on opportunities to increase your wealth.  However, all investments carry risk, and when you invest, you have the potential to lose money.

There are many different types of investments.  Some common types of investments include stocks, bonds, certificates of deposit, mutual funds, money market funds, exchange-traded funds, and annuities.  There are also more complex investment vehicles, such as real estate investment trusts (REITs), unit investment trusts (UITs), hedge funds, commodities, and private placements.

When an investor suffers harm, including investment losses, due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer in an effort to be compensated. The case will be presented and defended in an arbitration proceeding to a panel of arbitrators instead of a court of law in front of a judge and jury.

Arbitration is the primary forum for resolving disputes between investors and brokerage firms or financial advisors because the parties have contractually agreed to use arbitration as an alternative dispute resolution process. When an investor opens an account with a broker-dealer, the investor is required to sign an array of account opening documents. These account opening documents regularly include an arbitration clause, which requires that arbitration be used as an alternative to litigation. This requirement is often a contractually binding obligation for both parties. As a result, disputes between investors and financial advisors or brokerage firms are resolved in arbitration as an alternative to court.

The Financial Industry Regulatory Authority (FINRA) is authorized by Congress to regulate the financial services industry and operates the largest arbitration forum for securities disputes. Most securities arbitrations take place using FINRA’s Dispute Resolution Services’ arbitration forum because, as FINRA members, financial advisors and brokerage firms are required to arbitrate customer complaints upon the filing of a claim through FINRA.

Iorio Altamirano LLP is investigating whether registered stockbrokers and financial advisors inappropriately recommended that customers purchase common stock of Eastman Kodak Company (KODK).

Iorio Altamirano LLP is an investor advocate law firm based in New York, NY. We help investors recover financial losses due to wrongful conduct by financial advisors and brokerage firms.

If you suffered financial losses from an investment in Kodak stock recommended to you or purchased on your behalf by a stockbroker or financial advisor, contact New York investor protection attorney August Iorio of Iorio Altamirano LLP.  August Iorio, a native of Rochester, New York, can be reached at or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.

The global campaign promoting investor education and protection kicked off this week. Securities regulators in the U.S. issued a joint investor bulleting highlighting key themes for investors. Among them, the benefits of holding long-term investments, the rise of COVID-19 scams, the need for investors to use resources available to confirm that they are dealing with a reputable firm, and the importance of asking questions to financial professionals.

All sensible topics, to be sure. However, given the campaign’s scope and the multitude of stakeholders involved, the campaign misses an opportunity to have a meaningful impact where it matters most: enhancing investor protections for Main Street.

FINRA’s 2019 statistics show that it imposed $39.5 million in fines to member firms and ordered $27.9 million in restitution to investors. FINRA imposes monetary fines to member firms when it identifies misconduct. These fines also have the added goal of discouraging further misconduct. Restitution is used to address the issue of an investor unjustly suffering a monetary loss. Luckily for those investors, FINRA was able to make them whole. But what about cases that did not involve action by the regulator or went unreported?

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