- April 19, 2022
- Morgan Stanley
Robert David (CRD#: 5211223) is an Investment Advisor and previously registered Broker.
He entered the securities industry in 2006 and previously worked for Morgan Stanley; and Citigroup Global Markets, Inc.
Current And Past Allegations Of Conduct Leading To Investment Loss
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in April 2022, FINRA sanctioned Robert David, issuing a civil and administrative penalty of $15,000, and suspending him from all capacities for 20 months, beginning April 18, 2022 and ending December 17, 2023.
The FINRA sanction states, “Without admitting or denying the findings, David consented to the sanctions and to the entry of findings that he falsified his customers’ account profile information. The findings stated that David falsely increased the net worth and liquid net worth of eight customers and changed the risk tolerance of one customer’s account in his member firm’s systems for maintaining account profile information for brokerage accounts. David did this in order to circumvent the firm’s solicitation restrictions and concentration limits for non-investment grade, fixed-income securities. By falsifying this information, David made the customers eligible for purchases of non-investment grade, fixed-income securities, for which they would have otherwise been ineligible under the firm’s procedures. As a result, David caused the firm to maintain inaccurate books and records. The findings also stated that David overconcentrated three customers in non-investment grade, fixed income securities. Specifically, David concentrated between approximately 32.72 and 71.18 percent of these customers’ liquid net worth in non-investment grade, fixed-income securities, which was inconsistent with the customers’ investment objectives and risk tolerances. These securities entailed a high degree of risk, including the risk of default, and subjected the customers to a substantial risk of loss. The findings also included that David exercised discretion in eight customers’ accounts without prior written authorization.”
For a copy of the FINRA sanction, click here.
In addition, Robert David has been the subject of six customer complaints, including # that remain pending, including the following:
- July 2020 — “CLIENT ALLEGED, INTER ALIA, FAILURE TO FOLLOW INSTRUCTIONS WITH RESPECT TO INVESTMENTS MADE IN HIS MANAGED ACCOUNT 2017-2019 DAMAGES UNSPECIFIED.” The customer dispute was settled for $60,000.
- April 2020 — “Client alleged, inter alia, misrepresentation with respect to corporate bond investments – 9/24/2014 to 02/29/2020.” The customer dispute was settled for $85,000.
- March 2020 — “Client verbally alleged, inter alia, unsuitability with respect to investments. – April 2015- March 2019.” The customer dispute was settled for $35,000.
- May 2019 — “Client alleged, inter alia, unauthorized trading with respect to investments – October 2010 to May 2019.” The customer dispute was closed with no action.
- May 2019 — “Claimants allege, inter alia, unsuitability with respect to investments Mar 2017 – Mar 2019. The customer dispute was settled for $200,000.
- March 2019 — “Allegations related to registered representatives entering inaccurate client profile information relative to bond-related transactions and concerns that some of those transactions were not confirmed immediately beforehand.” Robert David was separated from employment with MSSB after allegations were made.
For a copy of Robert David’s FINRA BrokerCheck, click here.
We Help Investors Recover Investment Losses
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 age, 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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