- August 30, 2021
- Raymond James
Timothy Bartelt (CRD#: 2501532) a/k/a “Tim Bartelt” is a registered Broker at Raymond James in Elm Grove, Wisconsin. He entered the securities industry in 1994 and previously worked for Ameriprise Advisor Services, Quick & Reilly, A.G. Edwards and three other brokerage firms, one of which was expelled by FINRA.
In May 2021, the Wolper Law Firm filed an arbitration claim against Raymond James on behalf of an elderly client of Timothy Bartelt, alleging that he engaged in a pattern of high-velocity trading in speculative securities. Alleged damages are greater than $1 million.
Specifically, the customer alleged “This case is about the excessive and unsuitable commission-driven trading of Unit Investment Trusts (“UITs”), high-yield mutual funds, real estate investment trusts (“REITs”) and energy sector securities, including speculative common stocks, limited partnerships, master limited partnerships (“LPs” and “MLPs”) and securitized energy trusts…The strategy was poorly conceived and, from inception, the risk/reward ratio was completely imbalanced against Claimant.”
It is further alleged that millions of dollars in securities were traded in the customer’s portfolio each year, often times through investment vehicles that are designed to be long-term due, in part, to their higher commission structure.
The claims are currently pending and have not been adjudicated.
For a copy of Timothy Bartelt’s FINRA BrokerCheck, click here.
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 has been recently sanctioned by FINRA for 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.
Linn Energy, Resolute Energy Corp. and Hi-Crush, energy limited partnerships and securitized trusts, such as Legacy Reserve, LP, Sandridge Permian Trust, Sandridge Mississippian Trust II, and Memorial Production Partners, LP are among the other positions that were actively traded and resulted in large losses.
Excessive trading often occurs when a Financial Advisor puts his or her interests ahead of the clients and makes transactions solely for the purpose of generating commissions. Financial Advisors have a regulatory duty to recommend suitable investment strategies. One of the components of the suitability analysis is quantitative suitability.
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. 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.
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.