FINRA’s Department of Enforcement investigated Stein and alleged he recommended unsuitable RCN investments to at least eight customers. RCNs arc short-term notes of an issuer that are linked to an underlying equity and pay a fixed interest rate. The investor receives the interest payment at maturity plus either 100% of the original investment amount or a predetermined number of shares of the linked equity.
FINRA alleged Corbman recommended unsuitable RCNs to eight customers over the course of 24 transactions amounting to approximately $4 million. According to FINRA, most of the customers were over the age of 60 and had modest or conservative investment objectives and risk profiles. Additionally, Stein increased the risk in his customers’ accounts by recommending a heavy overall concentration of RCNs to the customers relative to their overall net worth.
Based upon the foregoing misconduct, FINRA alleged Stein violated NASD Rules 2110 and 2310, as well as FINRA Rule 2010. NASD Conduct Rule 2310 requires financial advisors to recommend suitable investments and investment strategies to their clients (known as the suitability rule) based upon the client’s unique financial situation, including investment objectives and risk tolerance. Here, FINRA alleged Stein recommended risky investments that exceeded each customers’ risk tolerance and investment objectives.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment damages investing with Stein through CSM or Capital Securities Management, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please contact one of our attorneys at (800) 627-2179 to schedule a free consultation.