Cecil Ross (CRD # 2391047) is a Financial Advisor at LPL Financial in San Angelo, Texas. Cecil Ross has been in the securities industry since 1993 and previously worked at Raymond James. While at Raymond James, Cecil Ross was engaged in the practice of selling Unit Investment Trusts.
A Unit Investment Trust is a closed-end investment company typically issues redeemable securities (or “units”), like a mutual fund, which means that the UIT will buy back an investor’s “units,” at the investor’s request, at their approximate net asset value (NAV). A UIT typically will make a one-time “public offering” of only a specific, fixed number of units (like closed-end funds). Many UIT sponsors, however, will maintain a secondary market, which allows owners of UIT units to sell them back to the sponsors and allows other investors to buy UIT units from the sponsors.
A UIT will have a termination date that is established when the UIT is created, although it may be in the distant future. In the case of a UIT investing in bonds, for example, the termination date may be determined by the maturity date of the bond investments. When a UIT terminates, any remaining investment portfolio securities are sold and the proceeds are paid to the investors.
A UIT does not actively trade its investment portfolio. That is, a UIT buys a relatively fixed portfolio of securities (for example, five, ten, or twenty specific stocks or bonds), and holds them with little or no change for the life of the UIT. Because the investment portfolio of a UIT generally is fixed, investors know more or less what they are investing in for the duration of their investment. Investors will find the portfolio securities held by the UIT listed in its prospectus.
Raymond James is one of several brokerage firms that was audited and ultimately sanctioned by FINRA regarding the sale of UITs. Specifically, FINRA was focused on short-term trading of UITs that have produced excessive commissions for Financial Advisors, like Cecil Ross, and minimal gain for the clients. UITs are known to produce commissions of 2%-3%, which is above-average for most securities products.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on December 18, 2019, Cecil Ross was sanctioned by FINRA for his sales practices in connection with the short-term trading of UITs:
“Without admitting or denying the findings, Ross consented to the sanctions and to the entry of findings that he engaged in an unsuitable pattern of short-term trading in Unit Investment Trusts (UITs) in customers’ accounts. The findings stated that despite the costs associated with purchasing units in new UITs, Ross recommended that most of his customers sell and roll over their positions in UITs after less than one year. Ross’ recommendations, which caused his customers to incur unnecessary excess sales charges, were unsuitable considering the frequency and cost of the transactions. Ross’ member firm has agreed to pay restitution to customers relating to the early sale of UITs pursuant to a settlement with the Securities and Exchange Commission.”
Cecil Ross was fined $5,000 and suspended for four months.
For a copy of the FINRA sanction, click https://www.finra.org/sites/default/files/fda_documents/2014042621701%20Cecil%20Allen%20Ross%20CRD%202391047%20AWC%20jm.pdf
In addition, Cecil Ross was the subject of a customer complaint in 2014, alleging “that FA sold unsuitable investments and engaged in excessive trading.” The dispute proceeded to an arbitration and the customer was awarded damages of $100,000.
For a copy of Cecil Ross’s CRD, click https://brokercheck.finra.org/individual/summary/2391047#disclosuresSection
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.
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