FINRA’s Department of Enforcement investigated Halls and discovered he recommended at least 20 customers switch from one closed-end fund purchased during an initial public offering to another closed-end fund on a short-term basis. FINRA alleged Halls failed to understand fundamental aspects of closed-end funds traded at an IPO because his recommendations caused the customers to purchase the closed-end funds at inflated prices. Specifically, FINRA alleged Halls did not consider recommending that the customers purchase the same closed-end funds in the secondary market where the transaction costs would have been significantly lower.
Based upon the foregoing misconduct, FINRA alleges Halls violated several financial industry rules and regulations, including NASD Conduct Rules 2310 and FINRA Rule 2010. Specifically with respect to NASD Conduct Rule 2310, financial advisors are required to recommend suitable investments and investment strategies to their clients (known as the suitability rule). Additionally, a financial advisor must have a reasonable basis to recommend a transaction to a customer or else the recommendation is deemed unsuitable. Here, Halls did not have a reasonable basis to recommend closed-end funds sold at an IPO and then switch to another closed-end fund on a short-term basis.
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 lost money investing in closed-end funds with Halls through Ameriprise, 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.