FINRA’s Department of Enforcement investigated Tau and discovered he recommended an unsuitable overconcentration in a stock position to an investor in the amount of $204,000 that resulted in a $30,000 loss. Specifically, Tau recommended a retired investor with a conservative investment objective and risk tolerance and limited assets and income to allocate 70% of his liquid net worth in the stock.
Moreover, FINRA alleged Tau exercised discretion in the account of the custom by effecting ten trades of the aforementioned stock without obtaining prior written authorization from the customer. Indeed, Tau also failed to obtain written acceptance of the account as discretionary by his employer member firm, Garden State.
Based upon the foregoing misconduct, FINRA alleges Tau violated several financial industry rules and regulations, including NASD Conduct Rules 2310, IM-2310-2 and 2510(b), as well as 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). Typically, a claim for unsuitable investments is brought as a form of a negligence claim with the theory: the financial advisor had a duty to recommend suitable investments; the financial advisor breached the duty with unsuitable investments; and the financial advisors unsuitable investments caused the investor damages.
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 Tau through Garden State or NY Life Securities, 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.