Stockbroker Craig Siegel of New York, New York, who was most recently associated with the firm Portfolio Advisors Alliance, LLC, has been suspended by the Financial Industry Regulatory Authority (FINRA) for failing to cooperate with the regulator’s investigation into alleged sales practice violations.
Mr. Siegel is also involved in legal disputes with at least three of his former customers who allege that Siegel made unsuitable investment recommendations to them. The customers also variously allege that (1) Siegel engaged in churning, excessive concentration, breach of fiduciary duty, and fraud, and (2) Portfolio Advisors Alliance is either derivatively liable for Siegel’s misconduct or directly liable as a result of its negligent supervision of Siegel.
Stockbrokers have a duty to recommend suitable investments and investment strategies to their clients. A recommendation is only suitable if it comports with the client’s investment objectives, risk tolerance, investment experience, investment time horizon, liquidity needs, and income needs. Together these considerations form the investor’s unique “investment profile.” The duty to recommend suitable investments cannot be disclaimed through risk disclosures or waivers.
Breach of Fiduciary Duty
Fiduciaries have a duty to act in a manner that they reasonably believe is in the best interest of their clients. They also have duties of honesty, loyalty, care, and disclosure. A breach of fiduciary duty occurs when the fiduciary violates the trust and confidence reposed in him or her by the client.
“Churning is the excessive buying and selling of securities in a customer’s account by a broker, for the purpose of generating commissions and without regard to the customer’s investment objectives or interest or with the intent to defraud.” In the Matter of Timothy Gautney, Exchange Act Release No. 65151 (Aug. 17, 2011). It is actionable under the common law (negligence or fraud) and under securities laws, including Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
Misrepresentations and Omissions
There are a multitude of state and federal statutes that make it unlawful to mislead and defraud investors in connection with the purchase or sale of securities. The best known of these laws is Section 10(b) of the Securities Exchange Act of 1934, which is a federal statute. Each of the 50 States has its own set of securities laws, known as “blue sky” laws. Many States have modeled their blue sky laws on the Uniform Securities Act, which contains a variety of different civil liability provisions relating to misrepresentations and omissions.
If you have suffered investment losses as a result of the malpractice or misconduct of Craig Siegel and/or Portfolio Advisors Alliance, LLC, our experienced team of securities attorneys may be able to assist you in recovering some or all of your losses. Call us toll-free at 888-607-4819 for a free consultation or email us through our “Contact” page to schedule a free consultation.