- January 17, 2021
- Dinosaur Financial Group
David Karandos (CRD#: 1934119 ) was a registered broker and investment adviser employed by Dinosaur Financial Group, LLC. from 2013-2019. Previous employers included Morgan Stanley Smith Barney; UBS Financial Services, Inc.; Merrill Lynch, Pierce, Fenner & Smith, Inc.; and Mimlic Sales Corporation.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on November 19, 2020, a complaint was filed against David Karandos for allegedly making unsuitable investments and improperly withdrawing funds from customer accounts. The complaint requests damages of $436,000.00.
According to FINRA Broker Check, “By letter received November 19, 2020, counsel for client complained that Karandos placed clients in unsuitable investments from 2014 to 2018 and improperly withdrew funds from other family accounts from 2016 to 2018.”
Customer Complaints and Other Disclosures Against David Karandos
Several customer disputes have been lodged against David Karandos, going back more than 15 years.
On November 10, 2020, a customer dispute was pending against David Karandos. The customer alleges that he engaged in unsuitable recommendations from October 2014 through May 2017.
On May 14, 2020, a customer dispute was filed and remains pending. It’s alleged that that Karandos placed one customer in unsuitable investments, including two private placements and life settlement viaticals, and that Karandos converted the proceeds of another customer’s viatical. Damages of $500,000.00 were requested.
On March 9, 2018, a tax judgment/lien was filed against David Karandos for $56,367.51
On May 1, 2015, a tax judgment/lien was filed against David Karandos of $434,536.70.
On December 7, 2011, a customer dispute was settled for $313,564.64 after it was alleged that David Karandos breached his fiduciary duty through unsuitable recommendations of volatile, high-risk, and illiquid investments.
On May 12, 2011, a customer dispute was settled for $493,000.00 after it was alleged that David Karandos breached his fiduciary duty by recommending and/or permitting an excessive amount of alternative investments in the portfolio of the Indiana State Teachers Association (ISTA).
On October 26, 2010, a regulatory action initiated by the Indiana Securities Division was finalized against David Karandos for his recommendation of alternative investments for clients that were misrepresented as to their suitability and for his use of excessive and unreasonable advisory fees. It was settled with a disgorgement of $50,000.00 and a suspension of all capacities in Indiana for 75 days, beginning March 1, 2012.
On August 19, 2003, a customer dispute was settled. It was alleged that David Karandos engaged in unsuitable and unauthorized transactions. The dispute was settled for $27,500.00; the complaint sought damages of $32,554.00.
For a copy of David Karandos’s FINRA BrokerCheck in this case, click here.
Why Unsuitable Investments and Improper Withdrawals from Accounts Are a Problem for Investors
FINRA rules require broker-dealers to function with their client’s best interests in mind. When a broker-dealer makes recommendations that don’t align with a customer’s tolerance for risk or their investment goals, it’s a suitability issue. In addition, making improper withdrawals is akin to theft, a serious violation of trust, law, and ethical practices.
FINRA has defined the standards in which investment recommendations made by brokerage firms and registered financial advisors are evaluated. The FINRA suitability rule focuses on three fundamental concepts: (1) reasonable basis suitability, (2) quantitative suitability, and (3) customer-specific suitability.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s:
● Other investments
● Financial situation and needs
● Tax status
● Investment objectives
● Time horizon
● Liquidity needs
● Risk tolerance
● Any other information disclosed by the customer
Failure by a financial advisor to adhere to these requirements is evidence of negligence or, worse, investment fraud. If you as the investor can establish, at a minimum, negligent misconduct, you may be entitled to recover your investment losses.
The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org.