According to public records released by the Financial Industry Regulatory Authority (FINRA), Stuart Pearl was sanctioned in October 2017 by FINRA for allegedly placing discretionary trades to liquidate a senior investor’s investments without obtaining prior written authorization to place those trades. A Letter of Acceptance, Waiver, and Consent (AWC) states Pearl agreed to a fine and 45-day suspension from any association with a FINRA firm for his alleged conduct.
The AWC also states that, in June 2010, Pearl allegedly unsuitably recommended that two retirees in their 70s open a “margin account” and purchase $122,000 in securities on margin. Using “margin” involves borrowing funds from a brokerage firm to purchase investments and may involve “margin calls,” which are requests for an investor to deposit more funds into a margin account. The AWC said the retirees allegedly were not experienced with margin and were subjected to significant increased margin debt and several margin calls. The AWC states Pearl did not admit or deny any of FINRA’s findings.
According to FINRA records, three customers previously filed the following complaints against Pearl. In 2013, a customer alleged Pearl sold her investments without first consulting her, heavily margined her account, and recommended unsuitable investments to her. In 2012, a customer alleged Pearl placed trades and used margin in the customer’s account without authority to do so. In 2002, a customer alleged Pearl failed to properly appraise the risk exposure in the customer’s account. FINRA records indicate there was no finding of fact made in these claims and they were settled for monetary amounts.
According to FINRA records, Pearl was formerly registered as a General Securities Representative with Ameriprise Financial Services from June 2010 through July 2015, during which time he worked at a Deerfield, Illinois branch office. Public records also state, since July 2015, he has been associated with David A. Noyes subsidiary, Noyes Advisors LLC, and he is registered as an Investment Adviser Representative with the states of Arizona, California, and Illinois and is working in Chicago, Illinois.
Recoveries for Unsuitable Recommendations, Unauthorized Trading, and Inadequate Supervision
Rules and regulations require brokers and advisors, like Stuart Pearl, to recommend only suitable investment products and strategies to their customers. Suitability is based on factors such as a customer’s age, investment objective, risk tolerance, investment experience, and financial status and needs. Margin accounts contain increased costs and risks, making them unsuitable for many investors. Additionally, rules require brokers to obtain express written authority from customers before making decisions on behalf of the customers to place trades or otherwise manage their accounts. However, when brokers make decisions on behalf of their customers, they owe their customers a greater duty of care, even if the brokers did not properly obtain authority to make those decisions.
Further, firms, like Ameriprise and Noyes Advisors, have a duty to closely monitor and supervise their brokers’ conduct to ensure they follow securities rules and regulations. This includes supervising brokers to ensure they only recommend suitable investment products and strategies. A firm’s duty to supervise its broker’s conduct is heightened when the broker makes decisions on behalf of a customer, even if the broker was not properly granted such authority.
When brokers and firms violate these rules and breach these duties to their customers, customers have a right to pursue claims to recover their investment losses caused by such misconduct. Moreover, brokerage firms are often found liable for their brokers’ misconduct.
If you have suffered investment losses with Stuart Pearl, contact Marquardt Law Office LLC to speak with a securities attorney and receive a free evaluation of options to recover your losses.
Marquardt Law Office LLC is a securities law firm located in Chicago, IL representing clients nationwide who have suffered losses due to misconduct such as fraud and negligence.