RBC Capital Markets Financial Advisor Joseph Chu Has Seven Customer Complaint Disclosures, Including Pending Complaint For Overconcentration in Energy Securities
Joseph Chu (CRD#: 4546805) is a dually registered Broker and Investment Advisor at RBC Capital Markets, LLC in Stamford, CT. He entered the securities industry in 2002 and previously worked for Merrill Lynch, Pierce, Fenner & Smith, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in June 2021, a customer dispute was filed against Joseph Chu. The allegation states, “Claimant contends that their financial advisor was negligent and breached their fiduciary duty by recommending unsuitable and overconcentrated energy equities, and the Firm failed to supervise the same.” Damages of $1 million are requested, and the complaint is pending.
In addition, Joseph Chu has been the subject of five customer complaints, including two that remain pending, including the following:
- January 2021–”The clients alleged the oil investment strategy implemented by the Financial Advisor was unsuitable and the FA’s personal connections with the CEO of one of their oil investments may have impaired his ability to provide impartial advice.” Damages of $180,213.94 were requested. The customer dispute was denied.
- November 2020–”The claimant alleged he suffered a net loss of more than 65% of his Employee Pension IRA Account value due to the FA’s failure to properly diversify the account and by their discretionary purchase of single company stocks almost all in oil and gas or energy sectors that were not appropriate for the client’s objectives or risk tolerance.” Damages of $367,452.00 are requested, and the complaint is pending.
- August 2020–”Claimant contends Respondent recommended unsuitable investments in oil-producing and industrial metals & materials stocks leading to an over concentration in those sectors which was outside of their investment objectives. Claimants allege the accounts declined in value from September 2018 through January 20, 2020.” Damages of $1.6 million are requested. The complaint is pending.
- July 2020–”Claimants are alleging that the Financial Advisor misrepresented the risk of allocation in Energy and Material sectors investments and over concentrated the Claimant’s accounts in highly volatile investments.” The customer dispute was settled for $175,000.
- May 2008–”CLIENT ALLEGES THAT THE FINANCIAL ADVISOR MADE UNSUITABLE INVESTMENT RECOMMENDATIONS.” The customer dispute was denied.
For a copy of Joseph Chu’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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