FINRA has suspended Oppenheimer & Co. Inc. broker Cesar Hurtado from the securities industry for 45 days. Mr. Hurtado was suspended over recommendations he gave involving an unsuitable options strategy in the accounts of two customers.
Mr. Hurtado was also fined $5,000 and agreed to complete 10 hours of continuing education concerning options trading and customer suitability.
If you have lost money with Cesar Hurtado, or Oppenheimer & Co. Inc., contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
FINRA Letter of Acceptance, Waiver, and Consent No. 2017055890901
Cesar Hurtado and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on August 6, 2021.
According to the AWC, between January 2013 and August 2019, Mr. Hurtado recommended and effected an unsuitable options strategy in the accounts of two customers. Mr. Hurtado repeatedly recommended that the customers take assignment, hold the securities, and later sell them at a loss rather than mitigate losses through a spread options strategy as intended.
During the relevant period, Mr. Hurtado recommended and effected a complex put spread strategy for two customers. Both customers were inexperienced options investors with relatively conservative investment objectives. They both relied on their brokerage accounts for income. Mr. Hurtado understood that put spreads are designed as a risk containment strategy and recommended such investments to these customers in those terms. In practice, however, with certain put spread transactions, Mr. Hurtado recommended that the customers forego this risk mitigation mechanism. Specifically, after putting on the initial put spread, Mr. Hurtado recommended that the customers take assignment of, and hold, securities whose stock prices had already declined, on occasions where he remained bullish on these securities. In many instances, after the customer held the security for a period of time, Mr. Hurtado recommended that the customer sell the security at a loss larger than the original put spread’s maximum loss.
Also, in 2015, Mr. Hurtado recommended that the customers overconcentrate their options investments in the energy sector, further increasing the risk of loss once the customers took assignment of the securities.
Mr. Hurtado’s recommendations caused approximately $1.6 million in net losses for the two customers from 2013 through 2019. The losses could have been avoided or substantially limited through suitable investment recommendations. The strategy was unsuitable for the customers, given their respective investment profiles.
Therefore, Mr. Hurtado violated FINRA Rules 2111(a), 2360(b)(18)(A), 2360(b)(19), and 2010.
FINRA Rules 2111(a), 2360(b)(19), and 2010
Under FINRA Rule 2111(a), an associated person must have a reasonable basis to believe that a transaction or investment strategy is suitable for the customers to whom it is recommended, based on the customers’ investment profiles.
In addition, pursuant to FINRA Rule 2360(b)(19)(A) and (B), an associated person may recommend the purchase or sale of an options contract only if they have reasonable grounds to believe that the transaction is “not unsuitable for [the] customer.”
Violating FINRA Rules 2111(a) and 2360(b)(19)(A) and (B) also constitutes a violation of FINRA Rule 2010, which requires associated persons to “observe high standards of commercial honor and just and equitable principles of trade.”
Cesar Hurtado (CRD#: 4137948)
Mr. Hurtado has 21 years of experience in the securities industry and has been registered as a broker with Oppenheimer & Co. Inc. in Miami, FL, since January 3, 2003.
According to his public FINRA CRD, Mr. Hurtado has also been the subject of at least two customer disputes. Both claims alleged fraud, negligent misrepresentation, breach of fiduciary duty, and negligence. Both matters settled for $275,000 and $285,000 respectively. Mr. Hurtado denied the allegations.
Oppenheimer & Co. Inc.
Financial institutions like Oppenheimer & Co. Inc. must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as suitable investment recommendations and options trading strategies, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
How to Recover Losses or Obtain a Free Consultation
If you have lost money with Cesar Hurtado, or Oppenheimer & Co. Inc., contact New York securities arbitration lawyer Jorge Altamirano of Iorio Altamirano LLP at email@example.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.