• March 8, 2024
• Edward Jones

Reuben Lamont Brown (CRD#: 7089559) is a previously registered broker and financial advisor.

 

Broker’s Background

He entered the securities industry in 2019 and he previously worked with Edward Jones.

 

Allegations of Misconduct

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in March of 2024, without admitting or denying the findings, Brown consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA during the course of a matter originated from his member firm’s filing of his Form U5. The findings stated that the firm filed a Form U5 noting that Brown had been terminated amid concerns that he had introduced clients to an investment outside the firm in violation of firm’s policies regarding private securities transactions and selling away.

 

FINRA Rule 8210(a)(1) requires a “member, person associated with a member, or any other person subject to FINRA’s jurisdiction to . . . testify at a location specified by FINRA staff . . . with respect to any matter involved in [a FINRA] investigation. . . .” FINRA Rule 8210(c) also states that “[n]o member or person shall fail to provide . . . testimony . . . pursuant to this Rule.” A violation of FINRA Rule 8210 is also a violation of FINRA Rule 2010, which requires persons associated with a FINRA Member to “observe high standards of commercial honor and just and equitable principles of trade” in the conduct of their business. On February 16, 2024, FINRA sent a request to Brown for on-the-record testimony pursuant to FINRA Rule 8210.

 

As stated in counsel’s email to FINRA on February 16, 2024, and by this agreement, Brown acknowledges that he received FINRA’s request and will not appear for on-the-record testimony at any time. By refusing to appear for on-the record testimony as requested pursuant to FINRA Rule 8210, Brown violated FINRA Rules 8210 and 2010. Respondent also consents to the imposition of the following sanctions: a bar from associating with any FINRA member in all capacities.

 

For a copy of Reuben Brown’s Letter of Acceptance, Waiver, and Consent (AWC), click here.

 

In addition, Reuben Brown has been the subject of two other disclosures, which include the following:

• July 2023—“ The client alleges the financial advisor suggested an investment opportunity outside the firm with zero risk and zero tax. Additionally, the client alleges this was to be a short term investment of only a few months; however, it has been nearly a year with no funds returned. Further, the client alleges he incurred an additional tax liability of $30,000.00 when he explicitly stated he wanted to avoid taxes.” The damage amount requested is $180,000 and the customer dispute is still pending.
• August 2022—“ Concerns registered representative introduced clients to an investment outside the Firm, in violation of FINRA Rule 3280 and the Firm’s policies regarding “Private Securities Transactions” and “Selling Away.”” Reuben Brown was discharged by Edward Jones.

 

For a copy of Reuben Brown’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.  This is in order 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.