Securities Arbitration Lawyer Blog
The Financial Industry Regulatory Authority (“FINRA”) has suspended financial advisor Gary Bowman from the securities industry for three months and fined him $10,000. FINRA alleged that between February 2013 through December 2017, Mr. Bowman engaged in an unsuitable pattern of short-term trading of Unit Investment Trusts in customer accounts.
Mr. Bowman has been a stockbroker at SagePoint Financial, Inc. in Corona, CA, since February 2013.
Iorio Altamirano LLP has also been investigating SagePoint Financial, Inc. over Unit Investment Trusts (UIT) early rollover practices.
If you have suffered financial losses investing with Gary Bowman or SagePoint Financial, Inc., contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.
Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as SagePoint Financial, Inc.
FINRA Letter of Acceptance, Waiver, and Consent No. 2018056858102
Gary M. Bowman and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on July 1, 2021, after FINRA alleged that between February 2013 and December 2017, Mr. Bowman engaged in an unsuitable pattern of short-term trading of Unit Investment Trusts in customer accounts. Specifically, FINRA alleged:
- Bowman recommended that his customers roll over UITs more than 100 days prior to maturity on approximately 4,200 occasions.
- Although his customers’ UITs typically had a 24-month maturity period, Mr. Bowman recommended that they sell their UITs after holding them for, on average, just over one year and use the proceeds to purchase a new UIT.
- Of the approximately 4,200 early rollovers recommended by Mr. Bowman, more than 600 were “series-to-series” rollovers.
- In other words, on more than 600 occasions, Mr. Bowman recommended that his customers roll over a UIT before its maturity date to purchase a subsequent series of the same UIT, which generally had the same or similar investment objectives and strategies as the prior series.
- As one example of a recommended “series-to-series” rollover, Mr. Bowman recommended that a customer purchase a UIT issued in the second quarter of 2016 that had an investment objective of an “above-average total return” and an investment strategy of “investing in dividend-paying companies in the technology sector” (the “2016 Q2 Series”).
- Although the 2016 Q2 Series UIT had a 24-month maturity period, Mr. Bowman recommended that his customer sell it after holding it for approximately 12 months and use the proceeds to purchase a later series of the same UIT issued in the second quarter of 2017 (the “2017 Q2 Series”).
- The 2017 Q2 Series had the same or a similar investment objective and strategy as the 2016 Q2 Series.
- Bowman’s recommendation that his customer sell the 2016 Q2 Series approximately 12 months prior to its maturity and use the proceeds to purchase the 2017 Q2 Series caused his customer to incur increased sales charges to purchase what was, essentially, the same investment.
As a result, Mr. Bowman violated FINRA Rules 2111 and 2010.
What is a Unit Investment Trust (UIT)?
Unit Investment Trusts (UITs) sell investors shares or “units” in a fixed portfolio of securities through a one-time public offering. UITs are considered long-term investments that mature on a specific date, generally after 15 or 24 months. Once the UIT matures, the underlying securities are sold, and the proceeds are paid to investors.
A UIT’s portfolio is passively managed between the trust’s inception and its maturity date. UIT sponsors often offer UIT product lines in successive “series.” These new series coincide with the maturity date of the prior series. Successive series of UITs tend to have the same or similar investment objectives and investment strategies as the prior series, despite a change in the underlying securities that make up the fixed portfolio.
Investors can expect to pay various upfront sales charges and fees, including an initial sales charge (generally 1% of the purchase price), a deferred sales charge (generally up to 2.5% of the offering price), creation and development fee (C&D fee, generally .5% of the offering price), and a fee for annual operating expenses.
A broker recommending the sale of a customer’s UIT before its maturity date and who then uses the sale proceeds to purchase a new UIT would cause their customer to incur greater sales charges than if the customer held the UIT to maturity. As a result of their long-term nature, structure, and costs, short-term trading of UITs may be unsuitable.
Financial Advisor Gary Max Bowman (CRD No. 2035699)
Gary Max Bowman has 31 years of experience in the securities industry and has been associated with ten firms, including two firms that have been expelled by FINRA.
SagePoint Financial, Inc. – Supervisory Duties
Brokerage firms like SagePoint Financial, Inc. must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to sufficiently supervise its financial advisors or the investment account activity, it may be liable for investment losses sustained by customers.
How to Recover Financial Losses or Obtain a Free Consultation
If you have lost money with financial advisor Gary Bowman or SagePoint Financial, Inc., contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your legal rights.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.
Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.