Former Joseph Stone Capital Broker Eugene McAdams Barred by FINRA After Refusing to Participate in Investigation of Unsuitability Allegations
Eugene McAdams (CRD#: 4190211) is a previously registered Broker. He entered the securities industry in 2000 and previously worked for Joseph Stone Capital, LLC; Cape Securities, Inc.; PHD Capital; Brookstone Securities, Inc.; America’s Choice Equities, LLC: J.P. Turner & Company, LLC; ITradeDirect.com Corp.; Emmet A. Larkin Company, Inc.; J.P. Turner & Company, LLC; IDS Life Insurance Company; American Express Financial Advisors, Inc.; Newbridge Securities Corporation; Milestone Financial Services, Inc.; Gunnallen Financial, Inc; and Seaboard Securities, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in August 2021, FINRA sanctioned Eugene McAdam, barring him from all capacities, indefinitely, beginning August 4, 2021. The FINRA sanction states, “Without admitting or denying the findings, McArthur consented to the sanction and to the entry of findings that he refused to provide on-the-record testimony requested by FINRA in connection with its investigation into the suitability of his recommended securities transactions in customers’ accounts while registered with his member firm.”
For a copy of the FINRA sanction, click here.
In addition, Eugene McAdam has been the subject of two customer complaints, including the following:
● June 2018–”EXCESSIVE AND UNNECESSARY TRADING ON MARGIN; ELDER ABUSE; FALSE AND MISLEADING STATEMENTS; FRAUD; NEGLIGENT MISREPRESENTATION; BREACH OF FIDUCIARY DUTY.” The customer dispute was settled for $20,000.
● February 2004–”UNAUTHORIZED TRANSACTIONS.” The customer dispute was settled for $60,000.
For a copy of Eugene McAdam’s FINRA BrokerCheck, click here.
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 agee, 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.
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