FINRA’s Department of Enforcement brought a complaint against Graham for the following alleged misconduct. FINRA alleged that, between November 2012 and May 2013, Graham recommended unsuitable UIT investments to two customers. A UIT is a type of investment that issues securities in the form of units, which represents undivided interests in a fixed portfolio of securities. Specifically, Graham recommended UIT investments that contained municipal bonds or high-yield bonds below investment-grade.
Here, FINRA alleged Graham recommended that a couple invest 94% of their net worth in Van Kampen Unit Investment Trust 1263 Closed End Strategy Master Municipal Income Portfolio Series 30. According to FINRA, the customers told Graham that their investment objective was income, their risk tolerance was conservative, and they had limited investment knowledge. The customers lost approximately 22.7% of the their investment, or about $80,000.
In addition, Graham also recommended a 98-year old customer allocate 42% of her net worth in Invesco Unit Trust Series 1313 Closed End Strategy Master Income Portfolio Series 35. According to FINRA, the customer’s investment objectives were income and capital appreciation, she had a moderately conservative risk tolerance, and short investment time horizon. The customer ultimately suffered approximately a $30,000 loss on her initial investment.
Based upon the foregoing misconduct, FINRA alleges Graham violated FINRA Rules 2111 and 2010. FINRA Rule 2111, for example, 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. A financial advisor also must have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer.
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 Graham through Huntington Investment, 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 or complete our free case evaluator.