As a financial analyst and legal expert with over a decade of experience in both sectors, I’ve seen my fair share of misconduct cases. The recent disciplinary action against George Snyder, a former broker with Ameriprise Financial, caught my attention due to the seriousness of the allegations and the potential impact on investors.
According to FINRA, on October 11, 2024, they released a Letter of Acceptance, Waiver, and Consent (No. 2022076795001) outlining the disciplinary action against Mr. Snyder. The letter alleges that he willfully violated the SEC’s Regulation Best Interest, a crucial industry standard that requires brokers to exercise reasonable diligence in order to believe their investment recommendations are in a retail customer’s best interest.
In this case, FINRA found that Mr. Snyder recommended leveraged exchange-traded products to 13 customers without a reasonable basis to believe they were suitable. These complex products are generally considered unsuitable for retail investors who plan to hold them for longer than one trading session. According to FINRA, at the time of his recommendations, Mr. Snyder lacked an understanding of the features and risks of these products and failed to conduct adequate research.
ETP Recommendations Allegedly Caused Investor Losses
The consequences of Mr. Snyder’s allegedly unsuitable recommendations were significant for his customers. FINRA states that the investors suffered approximately $30,000 in total realized losses, while Mr. Snyder received $3,699.03 in commissions. The Letter also details allegations that he exercised discretion in customer accounts without prior written authorization, violating his firm’s rules.
As a result of these alleged violations, FINRA imposed several sanctions on Mr. Snyder, including:
- A five-month suspension from associating with any FINRA member firm in all capacities
- A $10,000 fine
- An order to pay $3,699.03 plus interest in disgorgement
While Mr. Snyder did not admit to or deny the findings, he consented to the entry of FINRA’s findings.
George Snyder’s Background and Broker History
George Snyder entered the securities industry in 2000, registering with IDS Life Insurance Company and Ameriprise Financial Services. He worked out of Ameriprise’s Springfield, Missouri branch office until November 2022. With 22 years of experience as a broker, Mr. Snyder has passed three industry exams, including the Series 7 and Series 66. He is not currently registered with any FINRA member firm due to his suspension.
A review of Mr. Snyder’s FINRA BrokerCheck record reveals no additional disclosures or customer complaints prior to the recent FINRA action.
FINRA Rule 2111 and Suitability
FINRA Rule 2111, known as the “Suitability” rule, requires brokers to have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer. This is based on the customer’s investment profile, which includes factors such as age, financial situation, risk tolerance, and investment objectives.
In the case of Mr. Snyder, FINRA found that he lacked a reasonable basis to believe the leveraged exchange-traded products were suitable for his customers, some of whom were seniors with moderate risk tolerances and little to no experience with these complex products.
Unfortunately, investment fraud and bad advice from financial advisors are not uncommon. According to a study by Bloomberg, one in every 20 financial advisors has a record of misconduct, and these advisors often continue to work in the industry despite their past transgressions. Investors must remain vigilant and thoroughly research their financial advisors to minimize the risk of falling victim to unsuitable recommendations or fraudulent practices.
Consequences and Lessons Learned
The disciplinary action against George Snyder serves as a reminder of the importance of adhering to FINRA rules and regulations, particularly when it comes to suitability and acting in the best interests of clients. Unsuitable recommendations can lead to significant losses for investors and severe consequences for brokers, including fines, suspensions, and reputational damage.
As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” This case underscores the need for brokers to thoroughly understand the products they recommend and to ensure that their recommendations align with each client’s unique investment profile.
According to a study by the University of Chicago, approximately 7% of financial advisors have misconduct records, and past offenders are five times more likely to engage in misconduct again. While Mr. Snyder had no prior disclosures, this case emphasizes the importance of conducting due diligence when selecting a financial advisor.
If you have suffered losses due to unsuitable investment recommendations by George Snyder or another financial advisor, it is essential to consult with an experienced securities attorney. At Financial Advisor Complaints, our attorneys have recovered significant amounts for investors nationwide. Call us for a free consultation to discuss your legal options.
