- August 17, 2021
- Cadaret Grant & Co.
William Johnson (CRD#: 3174473) is a dually registered Broker and Investment Advisor at Cadaret, Grant & Co., Inc., in Greenville, SC. He entered the securities industry in 1999 and previously worked for Voya Financial Advisors, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in July 2021, a customer complaint was filed against William Johnson, requesting $250,000 in damages. The allegation states, “Claimants allege that they invested approximately $600,000 with the representative and he recommended an unsuitable strategy that included a number of high risk alternative investments between 2013 and 2017. They believe their losses are approximately $250,000.” The customer dispute is pending.
In addition, William Johnson has been the subject of four customer complaints, including one that remains pending, including the following:
● October 2020–”Claimants alleged that beginning in 2014 representative sold them unsuitable and risky investments which were against their wishes to invest in a conservative portfolio.” Damages of $200,000 are requested, and the customer complaint is pending.
● March 2017–”Clients allege that representative made promises which were not fulfilled.” The customer dispute was denied.
● August 2010–”THE CLIENT ALLEGES THAT THE SALE OF CLASS A MUTUAL FUNDS AND THE SUBSEQUENT PURCHASE OF CLASS C MUTUAL FUNDS WAS UNSUITABLE DUE TO HIGHER EXPENSES.” The customer dispute was settled for $1,100.05.
● August 2009–”CUSTOMER ALLEGES THAT THE VARIABLE ANNUITY SOLD TO HIM BY THE REPRESENTATIVE WAS UNSUITABLE FOR HIS NEEDS, DESIRE OR UNDERSTANDING. FURTHER, THE VARIABLE ANNUITY DID NOT INCLUDE LIFETIME BENEFITS OR AN ANNUAL BASE INCREASE, BOTH ITEMS THE CUSTOMER UNDERSTOOD HE HAD. ARBITRATION FILING: CLAIMANT ALLEGES NEGLIGENCE, NEGLIGENT MISREPRESENTATION, CONSTRUCTIVE FRAUD, BREACH OF FIDUCIARY DUTY, NEGLIGENT SUPERVISION AND TRAINING, AND VIOLATION OF THE SOUTH CAROLINA UNFAIR TRADE PRACTICES ACT AND UNIFORM SECURITIES ACT INVOLVING THE VARIABLE ANNUITY SOLD TO HIM BY THE REPRESENTATIVE.” The customer dispute was settled for $350,000.
● February 2009–”THE FIRM RECEIVED WRITTEN COMPLIANT FROM THE CLIENTS’ CLAIMING THAT REPRESENTATIVE DID NOT PROPERLY ALLOCATE ASSETS AND COMPLAINING ADVISORY FEES CHARGED IN HIS AND HIS WIFE’S ADVISORY ACCOUNTS.” The customer dispute was denied.
For a copy of William Johnson’s FINRA BrokerCheck, click here.
Alternative investments, or private placement investments, 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. Alternative investments are often 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.
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 agee, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.
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.