Former Stifel, Nicolaus Broker, Brian Engstrom, Sanctioned By FINRA Relating To Sales of Unit Investment Trusts (UITs)
Brian Engstrom (CRD # 1838926) was a Financial Advisor at Stifel, Nicolaus & Co. in Pensacola, FL. Brian Engstrom has been in the securities industry since 1989 and previously worked at Oppenheimer & Co. and Josephthal & Co.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on April 20, 2020, FINRA sanctioned Brian Engstrom, suspending him from associating with any broker-dealer for a period of three months and fining him $5,000. The sanction related to the short-term sale of unit investment trusts, or UITs, which have been a significant regulatory focus of FINRA since 2018.
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.
Specifically, the FINRA sanction stated:
“Engstrom consented to the sanctions and to the entry of findings that he engaged in an unsuitable pattern of short-term trading of unit investment trusts (UIT) in customer accounts. The findings stated that Engstrom recommended his customers roll over UITs more than 100 days prior to maturity on approximately 1,000 occasions. On more than 500 occasions, Engstrom recommended that his customers roll over a UIT before its maturity date in order to purchase a subsequent series of the same UIT that generally had the same or similar investment objectives and strategies as the prior series. Engstrom’s recommendations caused his customers to incur unnecessary sales charges, and were unsuitable in view of the frequency and cost of the transactions. Engstrom’s customers received reimbursement of these excess sales charges from his member firm in connection with FINRA’s separate settlement with the firm.”
For a copy of the FINRA sanction, click https://www.finra.org/sites/default/files/fda_documents/2018057247101%20Brian%20Douglas%20Engstrom%20CRD%201838926%20AWC%20va.pdf.
In addition, in 2016, Brian Engstrom was “permitted to resign” from Oppenheimer & Co. over allegations of unauthorized trading.
For a copy of Brian Engstrom’s CRD, click https://brokercheck.finra.org/individual/summary/1838926#disclosuresSection.
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.
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