Daniel P. Bailey (Bailey) submitted a Letter of Acceptance, Waiver and Consent (“AWC”) pursuant to FINRA Rule 9216 of FINRA’s Code of Procedure in May 2017. The underlying basis of the complaint alleged Bailey recommended an unsuitable, highly speculative investment to an elderly woman. Bailey settled the complaint with FINRA and accepted a one-month suspension and a $5,000 fine.
Bailey (FINRA CRD No. 2624368) has been a member of FINRA since 1995. From May 2013 through February 2017, and during the relevant time period, Bailey worked for Source Capital Group (Source Capital). Bailey currently works for Advisory Group Equity Services Ltd. Bailey’s BrokerCheck Report reveals 3 disclosures, including this regulatory action.
FINRA’s Department of Enforcement brought a complaint against Bailey for the following alleged misconduct. FINRA alleged Bailey recommended invest $125,000 in an international business company despite that fact that she was elderly, had a modest annual income and net worth. According to FINRA, this investment represented more than 25% of the client’s net worth. The offering documents disclosed the investment was “highly speculative.”
Based upon the foregoing misconduct, FINRA alleges Bailey 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.
Here, it’s clear Bailey did not have a reasonable basis to recommend a highly speculative investment to an elderly woman of modest means – especially in such a high concentration relative to her overall net worth. As a result, Bailey submitted an AWC and accepted his suspension and fine.
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.