INVESTOR ALERT—Raymond James Discharged Another Financial Advisor, Sherry Baker, For “Concerns” Relating To The Sale Of Unit Investment Trusts?
The Wolper Law Firm, P.A. is currently investigating claims against Raymond James’ sales practices with regard to Unit Investment Trusts (UITs) and, specifically, the sales practices of Raymond James Financial Advisor, Shery Baker. Shery Baker has been in the securities industry since the 1980s and, since her termination, now works for Benjamin Edwards & Co.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on November 7, 2018, Shery Baker was terminated by Raymond James due to alleged misconduct with regard to the sale of Unit Investment Trusts. Specifically, her FINRA BrokerCheck reports disclose the basis for termination as “Discharged due to concerns relating to the nature of advisor’s UIT activity.” These terminations follow similar terminations of other Raymond James Financial Advisors, Lynn Faust, Michael Faust, Timothy Dijak and Robert Rubarth for the same alleged misconduct.
For a full copy of Shery Baker’s BrokerCheck report, click https://brokercheck.finra.org/individual/summary/1249220#disclosuresSection
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 is being audited by FINRA regarding the sale of UITs. Specifically, FINRA is focused on short-term trading of UITs that have produced excessive commissions for Financial Advisors, like Shery Baker, and minimal gain for the clients. UITs are known to produce commissions of 2%-3%, which is above-average for most securities products.
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, P.A. is interested in speaking with clients of Raymond James, Sherry Baker, who have purchased Unit Investment Trusts. We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.
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.
The Wolper Law Firm, P.A. Has Filed An Arbitration Against Raymond James, Based On Alleged Sales Practice Misconduct By Financial Advisor, Steven Reznick
In March 2019, the Wolper Law Firm, P.A. filed an arbitration claim against Raymond James before the Financial Industry Regulatory Authority (FINRA). The arbitration relates to alleged sales practice misconduct committed by former Raymond James Financial Advisor, Steven Reznick, who was located in Raymond James’ Tallahassee, FL branch office. The Statement of Claim seeks damages of more than $350,000 and relates to the over-concentration of the clients’ portfolio in biotechnology stocks, including Intrexon Corp., Achaogen, Inc., Acadia Pharmaceuticals, Ziopharm Oncology, Inc., Mylan, Perrigo Company, Receptos, Inc., Alexion Pharmaceuticals, and Celgene Corp. .
The Statement of Claim alleges:
This case is about a rogue Financial Advisor, Steven Reznick, who has fifteen reported customer complaints since 2017, alleging sales practice violations. Claimants, who are both in their 60s, unsophisticated in financial matters and generally inexperienced investors, entrusted their life savings to Mr. Reznick. In complete disregard for Claimants’ needs and objectives, Mr. Reznick engaged in a high velocity pattern of discretionary trading in speculative biotechnology and pharmaceutical stocks. Virtually 100% of the assets in Claimants’ accounts were invested in the biotechnology and pharmaceutical sector. To further compound the risk associated with the concentrated positions, Mr. Reznik purchased and sold both long and short put and call options. Claimants neither understood nor would have ever accepted the level of risk associated with Mr. Reznick’s discretionary trading strategy.
The investment strategy was a complete failure. Claimants systematically lost money each year from 2015-2018 while the overall financial markets performed exceptionally well. When Claimants expressed concern about the depreciation of their accounts, Mr. Reznick told them to be patient and continue holding their biotechnology and pharmaceutical positions. Mr. Reznick represented that he was close with top level executives at many of the companies and believed strongly that the biotechnology sector was “the future.”
In the aftermath of this failed strategy, Claimants realized losses of more than $350,000. In the fall of 2018, Mr. Reznick left Raymond James and is no longer registered to conduct securities business with a FINRA member brokerage firm.
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, 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 mwolper@wolperlawfirm.com.