- November 11, 2018
- Raymond James
- Unit Investment Trusts
The Wolper Law Firm, P.A. is currently investigating claims against Raymond James’ with regard to its sales practices involving Unit Investment Trusts (UITs) and, specifically, the sales practices of Raymond James Financial Advisors, Lynne Faust and Michael Faust. Lynne Faust has been in the securities industry since 1981 and her son, Michael Faust, has been in the securities industry since 1999.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on October 17, 2018, both Lynne Faust and Michael Faust were terminated by Raymond James due to alleged misconduct with regard to the sale of Unit Investment Trusts. Specifically, their FINRA BrokerCheck reports disclose the basis for termination as “Discharged due to concerns relating to the nature of advisor’s UIT activity.”
For a full copy of Lynn Faust’s BrokerCheck report, click https://brokercheck.finra.org/individual/summary/729012#disclosuresSection and for a copy of Michael Faust’s BrokerCheck report, click https://brokercheck.finra.org/individual/summary/4050967#disclosuresSection
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.
A UIT will have a termination date that is established when the UIT is created, although it may be in the distant future. In the case of a UIT investing in bonds, for example, the termination date may be determined by the maturity date of the bond investments. When a UIT terminates, any remaining investment portfolio securities are sold and the proceeds are paid to the investors.
A UIT does not actively trade its investment portfolio. That is, a UIT buys a relatively fixed portfolio of securities (for example, five, ten, or twenty specific stocks or bonds), and holds them with little or no change for the life of the UIT. Because the investment portfolio of a UIT generally is fixed, investors know more or less what they are investing in for the duration of their investment. Investors will find the portfolio securities held by the UIT listed in its prospectus.
Raymond James is one of several brokerage firms that is being audited by FINRA regarding the sale of UITs. Specifically, FINRA is focused on short-term trading of UITs that have produced excessive commissions for Financial Advisors, like Lynne Faust and Michael Faust, and minimal gain for the clients. UITs are known to produce commissions of 2%-3%, which is above-average for most securities products.
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.
If you or someone you know was a customer Lynne Faust and Michael Faust and you experienced investment losses, please contact the Wolper Law Firm, P.A. at 800.931.8452 or by email at firstname.lastname@example.org to discuss your specific situation and the legal options available. The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration.
Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., 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.