Customer Disputes Pending Against First Republic Securities Co. Financial Advisor Matthew Babrick for Making Unsuitable Recommendations
Matthew Babrick (CRD#: 4433983) is an Investment Advisor at First Republic Securities Company, LLC and First Republic Investment Management, Inc., in Los Angeles, CA. He entered the securities industry in 2003 and previously worked for Goldman Sachs Co., LLC; and Merrill Lynch Pierce Fenner & Smith, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in November 2020, Matthew Babrick was the subject of a customer complaint in which it was alleged, “For the period July 2019 to September 2020, Client alleges, inter alia, the registered representative recommended an unsuitable investment strategy.” Damages of $1.1 million are requested.
In addition, Matthew Babrick has been the subject of two additional customer complaints, including one that remains pending, including the following:
● July 2020 – “For the period February 2018 to March 2020, Client alleges, inter alia, the registered representative recommended an unsuitable investment strategy.” The customer dispute is pending. Damages of $800,000 are sought.
● April 2020 – “Client alleges, inter alia, misrepresentation that a margin loan would be an unsecured loan and that an unsuitable strategy was recommended because of commissions.” This customer complaint was denied by FINRA.
For a copy of Matthew Babrick’s FINRA BrokerCheck, click here.
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.
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 age, other investments, financial situation and needs, tax status, and investment objectives. Other considerations include the customer’s time horizon, liquidity needs, risk tolerance, and 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.
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