FINRA fined and suspended former Amerprise Financial Services brokers Jack B McBride and Stuart L Pearl for misconduct related to use of margin in customer accounts, while McBride additionally received a citation for improperly mismarking purchases in non-traditional exchange-traded funds (ETFs). FINRA also charged McBride with improperly settling a customer complaint away from and without notice to the firm, misleading communications, and mismarking of order tickets. FINRA cited Pearl for unauthorized discretionary trading and unsuitable recommendations involving use of margin in an elderly client's account.
AWC #2014042223301 (Jack McBride)
AWC #2015046329201 (Stuart Pearl)
The report states that McBride (CRD #2517946) allegedly solicited 14 purchases in non-traditional exchange-traded funds (ETFs) from four customers, while improperly recording these transactions as "unsolicited"; at the time, Ameriprise Financial's policies and procedures prohibited representatives from soliciting trades in certain complex products, including non-traditional (inverse and leveraged) ETFs.
Second, McBride allegedly executed $320,000-worth of securities purchases on a customer's behalf, resulting in an insufficient balance to cover the purchases. As a result, the customer incurred a margin balance, and was charged margin interest. When the client discovered these charges, he demanded that McBride and Ameriprise reimburse him for this error.
Investigators found that instead of reporting this complaint to Ameriprise, McBride wrote a series of personal checks to his client to settle the complaint without Amerprise's knowledge. Furthermore, McBride purportedly maintained and communicated to his client erroneous account balances—overstated by as much as $370,000—and, in doing so, made a "false, exaggerated, unwarranted, promissory, or misleading statement or claim in any communication," in contravention of FINRA rules.
According to his BrokerCheck report, McBride is presently associated with Wunderlich Securities of Birmingham, Michigan, having been discharged by Ameriprise in 2014 for violation of company policy. Two customer disputes settled after Ameriprise terminated McBride alleged unsuitable recommendations of inverse-leveraged ETFs as well as precious metals and mining/natural resources ETFs.
Meanwhile, FINRA charged Pearl (CRD #1500833) with use of discretion without prior written authorization to liquidate securities in a senior investor's account. Pearl also allegedly unsuitably recommended that two elderly customers purchase approximately $122,000-worth of securities on margin, resulting in a "significant increase" in the clients' margin debt balances in relation to their available funds; the clients purportedly had no margin debt prior to investing with Pearl.
FINRA found that Pearl's margin recommendations were unsuitable, given the retired clients' "growth and income" investment objectives, "conservative/moderate" risk tolerances, and margin inexperience.
Pearl's BrokerCheck report reflects present affiliation with David A. Notes & Company of Chicago, Illinois, following a July 2015 termination from Ameriprise for improper use of discretion in non-discretionary accounts.
If you have invested with ex-Amerirprise Financial Services brokers Jack B McBride or Stuart L "Stu" Pearl, or with any broker or financial adviser whose unsuitable recommendations to purchase complex or excessively risky products, including non-traditional ETFs or purchases using margin or resulting in margin debt balances have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.