RBC Capital Markets, LLC Broker, Joseph Chu, Has Had Three Customer Complaint Disclosures
Joseph Chu (CRD # 4546805) is a Financial Advisor at RBC Capital Markets, LLC in Stamford, CT. Joseph Chu has been in the securities industry since 2002 and previously worked at Merrill Lynch, Pierce, Fenner & Smith.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in June and July 2020, Joseph Chu was the subject of two (2) customer complaints, alleging unsuitable investments in energy securities:
• 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.” Alleged damages are $1,6000.000 and the matter remains 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.” Alleged damages are $500,001.00 and the matter remains pending.
Over the last decade, the energy markets, including oil, gas and electrical, have been extremely volatile. The price of oil has risen and fallen precipitously. These wild swings subject correlated investments to price pressure. Moreover, many energy exploration companies raise capital from investors in an effort to seek the next source of oil or natural gas. These investment can prove profitable or result in a complete loss. The fluctuation of oil prices also impacts the demand for exploration, which can often stop these projects in their tracks.
In addition to the above, in May 2008, Joseph Chu was the subject of a customer complaint alleging sales practice misconduct. According to FINRA records the client alleged “THAT THE FINANCIAL ADVISOR MADE UNSUITABLE INVESTMENT RECOMMENDATIONS.” The claim was denied.
For a copy of Joseph Chu’s CRD, click https://brokercheck.finra.org/individual/summary/4546805#disclosuresSection
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:
• Other investments
• Financial situation and needs
• Tax status
• Investment objectives
• Time horizon
• Liquidity needs
• Risk tolerance
• Any other information disclosed by the customer
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