Articles Tagged with Unsuitable Recommendations

FINRA issued an award in the arbitration between claimants Joseph R. Ritz, Susan F. Ritz and respondents Morgan Stanley Smith Barney LLC (#CRD 149777) and Charles Alan Correal (CRD# 1366202).

According to the award documentation, the claimants asserted claims for breach of fiduciary duty, violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, suitability, professional negligence, breach of contract and breach of the duty of good faith and fair dealing, failure to supervise  and vicarious liability by Morgan Stanley Smith Barney and Charles Alan Correal.

The claimants allege that respondents invested their funds in risky and unsuitable energy stocks, including Seadrill, Ltd., Copano Energy LLC, and Interoil.

The Financial Industry Regulatory Authority (“FINRA”) permanently barred former Moloney Securities Co., Inc. (CRD# 38535) broker John R. McKinstry (CRD# 1012658) after he failed to continue to provide information and documents regarding allegations against him that he unsuitably recommended oil and gas securities to his customers.

In total, McKinstry has 15 misconduct disclosures on his FINRA BrokerCheck report.  Nine of the 15 have come in the past year, and most of them are FINRA arbitration complaints alleging unsuitable recommendations in oil and gas securities.

In August 2015, McKinstry was discharged from Moloney after the firm conducted an internal review concerning customer complaints and a FINRA cause exam.

The lawyers at the Silver Law Group, Law Office of David R. Chase and Ciklin Lubitz & O’Connell continue their investigation in Linn Energy, LinnCo, and the brokers and brokerage firms that sold these securities to investors.

Linn Energy and LinnCo are two companies whose investments are structured as master limited partnerships (MLPs).  What was once deemed a promising investment, the two companies have declined drastically.  The master limited partnership (MLP) surpassed $40 per share as recently as late 2012.  Since that time, Linn Energy has dramatically declined and recently declared bankruptcy.

Despite the risky nature of oil, gas, and energy-related securities, many brokers and brokerage firms aggressively sold these investments to their customers, some overconcentrating their customers in the sector.

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