Former stockbroker Michael Lancaster of Canton, Ohio, has been barred from the securities brokerage industry by industry self-regulator FINRA following allegations that he made unsuitable investments recommendations to an elderly customer. Following an investigation, FINRA found that Lancaster recommended a $70,000 investment in a commercial equipment leasing and finance fund, which was an alternative investment, even though the investment was inconsistent with the customer’s investment profile and financial situation. The findings stated that the liquid net worth required for the customer’s investment amount, as stated in the investment prospectus, exceeded the customer’s liquid net worth. In addition, the high-risk and illiquid nature of the investment was not consistent with the customer’s moderate risk tolerance. Even though the investment subsequently declined in value, the customer continued to hold the investment based on Lancaster’s recommendation that he do so.
Suitability
Financial advisors 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.
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.
Need Assistance?
If you have suffered investment losses as a result of the malpractice or misconduct of Michael Lancaster, 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.
