- May 9, 2022
- Morgan Stanley
Shawn Good (CRD#: 2022168) is a previously registered Broker and previously registered Investment Advisor.
He entered the securities industry in 1990 and previously worked for Morgan Stanley; Wells Fargo Advisors, LLC; and Charles Schwab & Co, Inc.
Current And Past Allegations Of Conduct Leading To Investment Loss
In April 2022, United States Securities and Exchange Commission initiated an enforcement action against Shawn Good, alleging that he was involved in a massive Ponzi Scheme.
The allegation states, “The Securities and Exchange Commission (the “Commission”), for its Complaint against Shawn Good (“Good”), alleges that this matter concerns a multi-year Ponzi scheme perpetrated by Good involving his clients at Morgan Stanley Smith Barney, LLC (“Morgan Stanley”). Good defrauded his clients – novice investors who trusted him, including retirees and a single mother of young children – of at least $4.8 million, resulting in more than $2 million of investor losses. Beginning in or about December 2012, and continuing through at least February 2022, Good solicited five Morgan Stanley clients to make supposed investments by transferring funds from firm accounts, often drawing on Morgan Stanley credit lines offered to those clients, to his personal bank account. Good solicited the clients to transfer the funds to his personal account, ostensibly, to make low-risk investments in real-estate development projects and supposedly tax-free government bonds. Good, in fact, used those funds to repay his earlier victims and also to pay his personal expenses, such as payments towards his Tesla, over $800,000 in credit-card bills, and Venmo transfers. At least three investors are currently owed money as a result of investing in Good’s scheme. During testimony, Good invoked his Fifth Amendment right against self-incrimination to virtually every question—including when asked about his future plans to raise funds and/or to conceal assets. For his conduct alleged in the Complaint, Good, directly and indirectly, has violated Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and has violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.” The civil action is pending.
In addition, Shawn Good has been the subject of two customer complaints, including the following:
- April 2022 — “Without admitting or denying the findings, Good consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with its investigation concerning a Form U5 filed by his member firm. The findings stated that the firm filed the Form U5 disclosing that it had terminated Good’s registration because he declined to cooperate with an internal firm review following client accusations.” Shawn Good was barred indefinitely from all capacities beginning April 14, 2022. For a copy of the FINRA sanction, click here.
- September 2011 — “CLIENT IS ALLEGING MISREPRESENTATION OF AN OHIO NATIONAL ANNUITY SOLD IN HIS ACCOUNT. ACTIVITY DATES ARE 3/31/11 – 9/9/11.”
For a copy of Shawn Good’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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