The Financial Industry Regulatory Authority (FINRA) recently filed a complaint (Disc. Proceeding No. 2016049938201) against former Stifel, Nicolaus financial advisor Harold S. Pomeranz (Pomeranz). The underlying basis of the complaint alleged Pomeranz recommended unsuitable short-term unit investment trusts (UITs) in some of his clients’ accounts. Pomeranz settled the complaint with FINRA and accepted an three (3) month suspension and a $5,000 fine.
Pomeranz (FINRA CRD No. 365461) has been a member of FINRA since 1970. From 1997 until September 2016, Pomeranz worked for Stifel, Nicolaus & Company, Inc. (“Stifel Nicolaus”). Pomeranz is no longer associated with any FINRA-member; however, he remains subject to FINRA’s jurisdiction. Pomeranz’s FINRA BrokerCheck report discloses two customer disputes.
FINRA’s Department of Enforcement brought a complaint against Pomeranz for the following alleged misconduct. FINRA alleged that, between January 2011 and December 2014, Pomeranz recommended unsuitable UIT investments to an 83-year-old investor. 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. Generally, UIT investments are considered long-term investments and short-term recommendations may be considered unsuitable.
Specifically, Pomeranz recommended 21 UIT transactions to the customer with an average holding period of less than 14 months. FINRA alleged Pomeranz recommended the investor use the proceeds from the short-term sale of a UIT to purchase another UIT with similar or even identical investment objectives. As a result, FINRA alleged Pomeranz recommended the investments without having a reasonable basis that the transactions were suitable in view of the nature of the transactions, the frequency of the transactions, and the transaction costs incurred.
Based upon the foregoing misconduct, FINRA alleges Pomeranz 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 Pomeranz through Stifel, Nicolaus, 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.