- October 16, 2024
- Uncategorized
Christopher Barrett Reynolds (CRD#: 5976029) was a previously registered broker.
Broker’s History
He entered the securities industry in 2017 and previously worked with Wesbanco Securities, Inc., and Pruco Securities, LLC.
Allegations of Misconduct
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in August 2024, without admitting or denying the findings, Reynolds consented to the sanction and to the entry of findings that he caused his member firm to maintain inaccurate books and records by forging customer signatures. The findings stated that Reynolds, without having the customers’ permission to do so, electronically signed or hand signed customers’ names on hard copy documents for three customers on 11 account documents. These account documents included transfer of assets forms and 1035 exchange/rollover/transfer forms and were required books and records of the firm. For two of these customers, Reynolds signed the customers’ names on withdrawal forms without the customers’ permission or authorization for the withdrawal or surrender.
The findings also stated that Reynolds willfully violated Rule 15/-1 of the Securities Exchange Act of 1934 (Regulation BI or Reg Bl) by recommending that customers make annuity withdrawals or surrenders and reinvest the proceeds in a registered index-linked annuity without having a reasonable basis to believe those transactions were in his customers’ best interests. As a result, Reynolds’ customers incurred penalties such as surrender charges, the imposition of new, lengthier surrender periods, and tax consequences. The tax consequences could have been avoided if Reynolds recommended 1035 exchanges, as opposed to recommending full withdrawals or surrenders and then moving the money into the new product.
After discovering Reynolds’ misconduct, his firm either reversed or stopped the customers’ transactions or, when that was not possible, paid the customers restitution. Reynolds also did not conduct a comparative analysis of the advantages and disadvantages of the existing annuities and the new registered index-linked annuity or make a determination that the customers would benefit from the new products. Reynolds thus failed to consider whether the purchases were in the customers’ best interest in light of the disadvantages of giving up the prior annuity contracts. Overall, Reynolds’ recommendations caused the customers to incur over $32,000 in surrender fees, in addition to adverse tax consequences.
The findings also included that Reynolds caused his firm to fail to retain emails and text messages as part of its books and records by using his personal email account and cell phone to exchange securities-related communications with firm customers. Reynolds did not forward his emails or text messages to the firm for review or retention.
As a result, Respondent consented to the imposition of the following sanctions:
- a bar from associating with any FINRA member in all capacities
For a copy of the FINRA Disciplinary Action Details, click here.
In addition, Christopher Reynolds has been the subject of three other FINRA disclosures:
- July 2023—“Customer alleges that the rep did not fully disclose all the facts regarding the replacement of a policy that was not suitable for his needs. Customer also alleges that a policy was surrendered instead of 1035 exchanged which generated multiple taxable events.” The customer dispute settled for $42,865.27.
- January 2023—Discharged by Pruco Securities, LLC, “Registered Representative submitted non-genuine client signatures on multiple applications; with the intent to evade suitability review, failed to disclose transactions as replacements; and used his personal email address to transmit client documents.”
- May 2009—“ Aggravated Assault F2: Defended a female friend from an unknown male, charged with assault, pled no contest, charges were eventually dropped and case withdrawn.”
For a copy of Christopher Reynolds FINRA BrokerCheck, click here.
We Help Investors Recover Investment Losses
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.
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.
FINRA regulations require that a customer’s written authorization is required before a broker-dealer can carry out transactions in the customer’s account. In addition, the broker-dealer’s member firm needs to approve the broker-dealer’s authorization. These measures are intended to protect the customer. Discretionary trading allows the broker-dealer to unilaterally decide to buy or sell securities at any price and not have to check with the client first. Exercising discretion without authorization can be costly to investors, and broker-dealers and their member firms, too.
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. 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.
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.