Former Stifel, Nicolaus & Company, Inc. Broker Joseph H. Pratt Barred by FINRA for Insider Trading; Customer Complaint Pending
Joseph H. Pratt (CRD#: 719416) was a broker employed by Stifel, Nicolaus & Company, Inc. from 2014-2019.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on June 12, 2020, a customer complaint was filed against Joseph H. Pratt for alleged violation of the Florida Securities and Investor Protection Act, breach of fiduciary duty, negligence, and violation of FINRA Rules 2010, 2020, and 2111.
Summary Detail of Allegations
Joseph H. Pratt had been barred by FINRA from all capacities indefinitely on September 24, 2019. According to the FINRA sanction, “Without admitting or denying the findings, Pratt consented to the sanction and to the entry of findings that he obtained confidential information that he received from insiders at a public biopharmaceutical company, and misused the confidential information by communicating it to several of his member firm’s customers. The findings stated that Pratt knew the company’s insiders, including a director, a member of the company’s scientific advisory board, and a doctor involved in the United States Food and Drug Administration (FDA) clinical trials.
“On numerous occasions, Pratt failed to disclose these relationships to his firm as required. The company sent the firm a letter stating that Pratt had been attempting to obtain confidential information from several company insiders.
“In response, the firm prohibited Pratt from speaking with the company’s employees. Despite this prohibition, Pratt continued to seek information from the company. In response to Pratt’s inquiries, the company’s insiders sent Pratt documents and emails containing confidential information concerning its ongoing FDA clinical trials, including patient data from the trial, newly discovered data that the company felt warranted a patent, and a confidential timeline of upcoming FDA filings.
“The findings also stated that although Pratt received approval to make a one-time personal investment in a speculative company, he did not provide his firm with prior written notice or obtain prior approval for his subsequent personal investments totaling $119,000 in shares of the company away from the firm. Additionally, Pratt failed to provide prior written notice or obtain prior approval for his solicitation of investors in the private securities transactions in the company. Pratt solicited the individuals, of whom included his firm’s customers, to invest approximately $436,000 in shares of the company.” Joseph H. Pratt was separated from his member firm that same day.
For a copy of the FINRA Sanction, click here.
In addition to the foregoing, Joseph H. Pratt has other disclosures reflected on his BrokerCheck report.
On November 15, 2011, a customer dispute against Joseph H. Pratt was settled for $20,000, although $62,021.01 had been requested. It was alleged that Pratt placed customer funds in high-risk investments when the client specifically requested investments that would not lose money.
On November 11, 2014, Joseph H. Pratt voluntarily resigned from his employment with Wells Fargo Advisors, LLC. At the same time, the firm was investigating Pratt’s relationship with outside companies and its clients’ private investment activities, although no client complaints had been received.
On July 22, 2009, a customer dispute was settled for $48,547.75, which was the amount sought, after contingent deferred sales charges were not disclosed to the client when the investments were purchased.
For a copy of Joseph H. Pratt’s FINRA BrokerCheck in this case, click here.
Why Insider Trading Is a Problem for Investors
When a broker-dealer uses confidential or otherwise unavailable information in the course of doing business, it jeopardizes his fiduciary duty to his customers. In addition, the insider gains the ability to drive their stock prices up in an unethical and illegal way, potentially harming ordinary investors’ ability to buy and sell stock. Clients whose broker-dealers engaged in insider trading may be able to recover some of their 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.
- Variable Annuities Come At A High Cost To Investors
- Transamerica Financial Advisors Settled Alleged FINRA Rule Violations Relating to Failed Supervision
- Cambridge Investment Research Financial Advisor Stewart Schram Suspended by FINRA for Allegedly Selling Away
- Brokerage Firms Have a Regulatory Obligation to Supervise Financial Advisors
- FINRA Sanctions Triad Advisors, LLC for Violating Rules on Supervision of Advisors
- Former Transamerica Financial Advisors Investment Advisor Jenny Feng Suspended and Fined for Making Unsuitable Recommendations
- Former Transamerica Financial Advisors Financial Advisor Wenru Liang Suspended and Fined for Making Unsuitable Recommendations
- First Financial Equity Corp. Investment Advisor Scott Wayne Reed Barred by FINRA After Allegations of Selling Away
- Four Complaints Filed Against Ameriprise Financial Services Investment Advisor Kevin Houser Alleging Unsuitable Recommendations
- Triad Sanctioned by FINRA for Violating Member Firm Rules on Supervising Financial Advisors