• August 20, 2024
• Prospera Financial Services

Chris S. Stocks (CRD#:2600346) is a registered broker and investment advisor with Prospera Financial Services, Inc., in Paradise Valley, AZ.

Broker’s History

He entered the securities industry in 1995 and previously worked with Morgan Stanley DW Inc.; Morgan Stanley & Co. Incorporated; Morgan Stanley Smith Barney LLC; and Morgan Stanley.

Current and Past Allegations of Conduct Leading to Investment Loss

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on July 23, 2024, FINRA made a preliminary determination to recommend disciplinary action be brought against Chris Stocks alleging Violation of FINRA Rules 3270 and 2010 in that he failed to disclose outside business activities; Violation of FINRA Rules 3280 and 2010 in that he failed to provide written notice prior to participating in a private securities transaction; and Violation of FINRA Rule 2010 in that he provided false information on annual compliance attestations. FINRA Case #20210735431.

In addition, Chris Stocks has been the subject of three other disclosures:
• November 2021— Discharged by Morgan Stanley, “Concerns regarding representative’s participation and activities in an outside hotel investment in which clients of the Firm were also invested. No known client complaints relating to this investment.”
• June 2002— “UNAUTHORIZED TRADES, NEGLECT, BREACH OF FIDUCIARY DUTY, POOR PERFORMANCE, RETURN OF PERSONAL PROPERTY.” The damage amount requested was $35,000 and the customer dispute was closed-no action.
• June 2001— “MISREPRESENTATION.” The customer dispute settled for $1,000.

For a copy of Chris Stock’s FINRA BrokerCheck, click here.

We Help Investors Recover Investment Losses
Pursuant to FINRA Rule 3270, outside business activities in which Financial Advisors become involved must be disclosed. FINRA Rule 3280 prohibits Financial Advisors from engaging in Private Securities Transactions, which are securities transactions that take place away from the employing brokerage firm. The purpose of these rules is to ensure that Financial Advisors do not engage in selling away. The Financial Industry Regulatory Authority (FINRA) strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not offered by the brokerage firm with which they are employed. For example, it is illegal and a violation of industry rules for a financial advisor to recommend or even suggest that a client invest in the financial advisor’s own business or a business operated by his or her friends or family. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.
The purpose behind this prohibition is to ensure that a financial advisor only offers to sell securities that have been vetted by his or her employer brokerage firm through a rigorous due diligence process. Most brokerage firms have an approved list of investments, products, and research that can be provided or made available to clients. Any deviation by the financial advisor from the approved product list may constitute selling away.
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 age, 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 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 mwolper@wolperlawfirm.com.