Unsuitable Bond Recommendation Leads to Suspension for Brenton Ditto

The Financial Industry Regulatory Authority (FINRA) sanctioned Brenton Ditto (CRD No. 4779103) for recommending a complex and unsuitable bond investment to a 95-year-old customer. FINRA alleged that in September 2021, Ditto advised the elderly client to invest approximately $71,000 in Government National Mortgage Association (GNMA) support class bonds, a type of mortgage-backed security that carries substantial risk and complexity. FINRA determined that Ditto failed to have a reasonable basis to believe the recommendation was in the customer’s best interest given his age, investment objective, and liquidity needs. As a result, Ditto willfully violated Rule 15l-1(a)(1) under the Securities Exchange Act of 1934 (Regulation Best Interest) and FINRA Rule 2010. FINRA imposed a four-month suspension, a $5,000 fine, and ordered disgorgement of $402.58 in commissions plus interest.

Ditto first registered with FINRA in 2004 and, since October 2014, has been registered as a General Securities Representative with LPL Financial LLC (CRD No. 6413). At the time of the misconduct, he was associated with LPL and working with retail clients.

Under Regulation Best Interest (Reg BI), brokers must act in the best interest of their retail clients and cannot place their own financial interests ahead of the customer’s. This rule requires that any recommendation of a security or strategy be appropriate based on the client’s investment profile, which includes factors such as age, financial needs, risk tolerance, and liquidity requirements. For example, recommending an illiquid or complex investment to an elderly investor who needs short-term access to funds is inconsistent with Reg BI’s standard of care. FINRA Rule 2010 further obligates brokers to maintain high standards of commercial honor and fair dealing.

According to FINRA, Ditto’s 95-year-old customer opened an account at LPL funded by the $75,000 proceeds from the sale of his home. The customer’s daughter, acting under power of attorney, told Ditto she needed a safe investment with no risk to principal and ready access to funds within a year for her father’s living expenses. Despite this, Ditto recommended the GNMA support class bonds—complex products that were highly sensitive to changes in interest rates and repayment priorities. When interest rates rose, the bonds’ value dropped sharply, leaving the client with approximately $19,000 in losses. The customer later settled his claim with LPL. FINRA concluded that Ditto’s recommendation failed to meet the best interest standard and exposed the client to unnecessary risk.

Lufrano Law, LLC is a national investment litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. Please contact us at (800) 627-2179 for more information if you have been the victim of investment negligence or fraud.

The content on this site reflects personal opinions and does not constitute statements of fact. No findings have been made against the firms or individuals mentioned. This blog is intended solely for educational purposes, drawing on publicly available information to provide general insights and a basic understanding of the law. It is not a substitute for legal advice.