Former Ameriprise Financial Services Broker and Investment Adviser Angel Bardeche Fined and Suspended After Engaging in Unsuitable Mutual Fund Trading for Clients
Angel Bardeche (CRD#: 4698117) is a former broker and investment adviser who was employed by Ameriprise Financial Services, Inc. from 2012-2019.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA) on January 6, 2021, Angel Bardeche received a civil penalty of $10,000, disgorgement of $5,000, and a 9-month suspension beginning January 19, 2021.
Summary Detail of Allegations
According to the FINRA sanction, “Without admitting or denying the findings, Bardeche consented to the sanctions and to the entry of findings that she recommended and effected an unsuitable strategy in recommending that her customers effect a pattern of switching of Class A mutual fund shares, including short-term liquidations. The findings stated that Bardeche recommended that customers purchase Class A mutual fund shares, later sell those funds, and then use the proceeds to buy more Class A mutual fund shares.
“In many instances, she recommended that the customer purchase Class A shares and later sell them after only a short period (and use the proceeds to buy more Class A shares). In some instances, the customer sold the first Class A mutual fund within 18 months of purchasing it, and in some instances, the customer sold the first Class A mutual fund within a year of its purchase. The customers paid a total of about $450,000 in sales charges on the switches. Bardeche also recommended costly back-to-back, short-term switches.
“For example, Bardeche recommended that a senior customer sell Class A shares that the customer had held for only 10 months and use the proceeds to buy new Class A shares that included over $3,100 in new sales charges. About eight months later, however, Bardeche recommended that the customer sell again and use the proceeds in a switch to buying other Class A shares that carried over $2,600 in new sales charges. Bardeche did not have a reasonable basis to believe that this recommended pattern of switching and short-term liquidations of mutual fund Class A shares was suitable for her customers.
“The findings also stated that Bardeche exercised discretion by effecting trades in non-discretionary customer accounts, without prior written authorization from the customers and without prior written approval by her member firm.”
For a copy of Angel Bardeche’s FINRA disciplinary action details, click here.
In addition to the foregoing, Angel Bardeche has been the subject of prior customer complaint disclosures.
On August 22, 2019, a customer dispute was settled. The customer alleged that Bardeche did not properly disclose to the client the surrender charge or annual fees associated with the variable annuity purchased in 2015. The dispute was settled for $51,545.16; damages of $9,993.05 had been sought.
On August 19, 2019, a customer dispute was settled. “The client alleged her former advisor did not explain there was a surrender charge associated with the variable annuity purchased in 2013.” The complaint was settled for $122,000.00; damages of $8,000.00 had been sought.
On May 22, 2019, a customer dispute was settled. “The client alleged his former advisor did not disclose that the variable annuity purchased in 2014 had a 10-year surrender period and associated surrender charges.” The complaint was settled for $138,277.65; $14,455.00 had been sought.
On April 18, 2019, Angel Bardeche was separated from her job at Ameriprise Financial Services, Inc. “The registered representative was terminated for company policy violations related to failing to obtain authorization from clients prior to placing trades and mutual fund trading activity.” The action was disputed as unjustified by Bardeche.
On April 8, 2019, a customer dispute was settled after clients alleged that front-end sales charges associated with recommended mutual fund purchases were not disclosed properly. The dispute was settled for $68,500.00 after $108,874.80 was sought.
For a copy of Angel Bardeche’s FINRA BrokerCheck in this case, click here.
Why Engaging in Unsuitable Strategy Is a Problem for Investors
FINRA’s suitability rule requires that broker-dealers ensure that any suggestions they make to their clients meet three minimum standards. When broker-dealers make recommendations to their clients that deviate from these standards, it violates FINRA’s suitability rule and may leave customers potentially vulnerable to increased risk or decreased return on their investment.
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:
● Other investments
● Financial situation and needs
● Tax status
● Investment objectives
● Time horizon
● Liquidity needs
● Risk tolerance
● 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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