Oppenheimer & Co. Financial Advisor Cesar Hurtado Suspended by FINRA
Cesar Hurtado (CRD#: 4137948) is a dually registered Broker and Investment Advisor at Oppenheimer & Co., in Miami, FL. He entered the securities industry in 2000 and previously worked for CIBC World Markets Corp.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in August 2021, FINRA sanctioned Cesar Hurtado, levying a civil and administrative penalty/fine of $5,000, suspending him from all capacities for 45 days beginning on September 7, 2021 and ending on October 21, 2021, and directing him to attend and complete 10 hours of continuing education concerning options trading and customer suitability by a provider that’s acceptable to FINRA. The FINRA sanction states, “Without admitting or denying the findings, Hurtado consented to the sanctions and to the entry of findings that he recommended and effected unsuitable put spread investment strategies in the accounts of two customers. The findings stated that this matter arose from the filing of a Uniform Application for Securities Industry Registration or Transfer Form (Form U4) that disclosed customer complaints regarding Hurtado’s conduct. The findings also stated that Hurtado understood that put spreads are designed as a risk-containment strategy and recommended such investments, however, with certain put spread transactions, he recommended that the customers forego this risk mitigation mechanism. In many instances, after the customer held the security for a period of time, Hurtado recommended that the customer sell the security at a loss larger than the original put spread’s maximum loss. Hurtado also magnified the risk of numerous put spread transactions, and subsequent assignments, by recommending that the two customers fund assignments on margin, thus increasing risk by exposing the account to margin calls and by requiring the customer to pay interest on the margin loan. Both accounts saw individual assignments of nearly $1 million funded on margin. Hurtado also recommended that the customers over-concentrate their options investments in the energy sector, further increasing the risk of loss once the customers took assignment of the subject securities. Hurtado’s recommendations caused approximately $1.6 million in net losses for the two customers. Those losses could have been avoided or substantially limited through suitable investment recommendations. Both customers settled claims against Hurtado’s member firm in connection with his conduct for a total amount of $560,000, to which Hurtado personally contributed $280,000.”
For a copy of the FINRA sanction, click here.
In addition, Cesar Hurtado has been the subject of two customer complaints, including the following:
● August 2019–”CLAIMANT ALLEGES CLAIMS FOR NEGLIGENCE, BREACH OF FIDUCIARY DUTY, BREACH OF CONTRACT, FRAUD AND NEGLIGENT MISREPRESENTATION CONCERNING THE INVESTMENTS IN HER ACCOUNTS. FROM 11/1/2013 TO PRESENT.” The customer dispute was settled for $275,000.
● September 2017–”Claimants assert claims for fraud, negligent misrepresentation, breach of fiduciary duty and negligence in connection with the investments in, and management of, their accounts. Accounts open from 2003-2017.” The customer dispute was settled for $285,000.
For a copy of Cesar Hurado’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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