Broker Alton Raney Facing Investor Dispute, Arkansas Securities Department Investigation

As an experienced financial analyst and legal expert, I can’t help but think of the famous Warren Buffet quote, “Risk comes from not knowing what you’re doing.” This concept rings true in light of the recent investor dispute involving broker Alton Raney, registered with St. Bernard Financial Services. The allegations against him are yet another reminder for investors to perform their due diligence before entrusting their hard-earned money to financial advisors. According to Raney’s BrokerCheck record, the Arkansas Securities Department sent him a notice of internet letter on December 6, 2023, intending to deny his registration due to alleged violations of rules related to mutual fund breakpoints.

Understanding the Allegation – Mutual Fund Breakpoints

To thoroughly understand this matter, it’s important to grasp what a mutual fund is and the role of breakpoints. A mutual fund is essentially a pool of funds from numerous investors, used to purchase a diversified portfolio of investments. The advantage of mutual funds lies in their ability to provide diversification and professional management to investors, regardless of their investment amount. Breakpoints are essentially discount levels on the sales charge investors pay when buying Class A shares of a mutual fund.

The controversy surrounding breakpoints arises when financial advisors fail to disclose these discounts to investors, as alleged in Raney’s case. It could result in investors paying more than necessary for their mutual fund shares, thus sparking investor disputes and possibly leading to FINRA arbitration.

Alton Raney’s Background and His Broker Dealer

With 36 years of experience, Raney has passed numerous securities exams, ranging from the Series 63 Uniform Securities Agent State Law Examination to the exigent Series 28 Introducing Broker/Dealer Financial Operations Principal Examination. These qualifications reflect a deep and varied understanding of the securities industry, amplifying the concern over the allegations made against him.

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In his career, Raney has served in several firms, such as LPL Financial, Kestra Advisory Services, and recently, St. Bernard Financial Services. However, the investor dispute tarnishing his BrokerCheck record illustrates the grave fact that even long-standing professionals with a rich background in the industry can face severe allegations.

While not every broker with a complaint in their ledger proves to be a bad actor, a shocking statistic from the Public Investors Arbitration Bar Association (PIABA), states that roughly 7.3% of financial advisors have at least one customer complaint in their career. This places a lens on the importance of investors meticulously researching any financial advisor they engage.

The FINRA Rule on Mutual Fund Breakpoints

Making sense of the complex world of legal and financial regulations can be daunting, but in simple terms, the Financial Industry Regulatory Authority (FINRA) mandates the practice of fair dealings in the security industry. As per the FINRA Conduct Rule 2341 (Investment Company Securities), brokers must inform investors about the breakpoint discounts they might be entitled to when purchasing mutual fund shares. Any failure to adhere to this rule could mean a violation of the customer’s rights, leading to potential litigation or arbitration.

Consequences and Lessons Learned

As the outcome of this case is still pending, the potential consequences for Raney cannot be explicitly predicted. However, if found guilty, he might face denial of registration, fines, or other sanctions from the regulatory authorities. Moreover, this dispute could tarnish his professional reputation and raise doubts among his clients.

But this isn’t just about one broker and his alleged mistakes. It serves as a wake-up call for investors to remain vigilant, analyze their financial advisors’ backgrounds, and demand transparency in every transaction. Simultaneously, it is a lesson for financial professionals to navigate with integrity, always prioritizing their client’s financial health and understanding. Stay tuned for more updates and stay informed about the ever-evolving realm of finance.

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