- August 6, 2020
- Alexander Capital
Jody Thompson (CRD # 2391190) was a Financial Advisor at Alexander Capital L.P. in New York, NY. Jody Thompson has been in the securities industry since 1994 and previously worked at Merrill Lynch, Pierce, Fenner & Smith Incorporated and Paineweber Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on February 28, 2020, Jody Thompson was Sanctioned by FINRA, suspending her for a period of five months. According to the FINRA sanction:
“Without admitting or denying the findings, Thompson consented to the sanction and to the entry of findings that he recommended several non-public offerings without having a reasonable basis to believe those transactions were suitable. The findings stated that due to Thompson’s failure to conduct reasonable diligence, there were risks and costs of the investments that he did not understand. The findings also stated that Thompson exercised discretion without written authorization in customer accounts.”
For a copy of the FINRA sanction, click https://www.finra.org/sites/default/files/fda_documents/2017055815301%20Jody%20Thompson%20CRD%202391190%20AWC%20sl%20%282020-1585786766756%29.pdf
Private placements is a broad term that describes securities that are not offered for sale through a public exchange. These can include promissory notes, private equity offerings, small, start-up businesses, etc. Private Placements are issued under Regulation D under the Securities Act of 1933. Regulation D provides exemptions from the more rigorous Securities and Exchange Commission (SEC) registration requirements and allows companies to offer and sell securities without extensive disclosures. The absence of standard disclosure requirements often creates.
The Securities Exchange Commission, federal courts, and FINRA have all found that brokerage firms have a duty to conduct a reasonable investigation concerning the private placements issuer’s representations concerning the security. A brokerage’s firm’s due diligence obligation also stems from suitability obligations requiring the broker to have reasonable grounds to believe that a recommendation to purchase, sell or exchange a security is suitable for the customer. In order to meet the due diligence obligation, the brokerage firm and/or financial advisor must make reasonable efforts to gather and analyze information about the private placement, the issuer and its management, the business prospects of the issuer, the assets held by or to be acquired by the issuer, the claims being made by the issuer in the offering materials, and the intended use of proceeds of the offering. The failure to determine this and other material information would necessarily preclude a financial advisor from disclosing to a customer the material aspects of a transaction.
In addition, Jody Thompson has been the subject of three customer complaint disclosures, alleging sales practice misconduct throughout her career. Among the complaints allege the following:
• April 2020—”POA alleges RR exerted undue influence over customer to influence a bequest in her Trust for RR’s children. Date of activity is unknown.” Alleged damages are $1,100,000.00.
• August 2011—”THE CUSTOMERS ALLEGE FAILURE TO FOLLOW INSTRUCTIONS IN JULY 2011. COMPENSATORY DAMAGES ARE NOT SPECIFIED.” The matter settled for $33,623.17.
• November 2009—”THE CUSTOMER ALLEGES UNSUITABLE INVESTMENT RECOMMENDATIONS.”
For a copy of Jody Thompson’s CRD, click https://brokercheck.finra.org/individual/summary/2391190
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
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
The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., 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.