Allegation’s seriousness, case information, and how it affects investors
In the complex world of securities and investments, having a trusted and authorized financial advisor is critical. However, the trust may be shattered when an advisor, like Kristopher O’Hare, is caught in the crossfire of an investor dispute, as disclosed on his BrokerCheck record (CRD #: 6256508).
On July 2, 2024, it was alleged that O’Hare executed an unauthorized transaction causing the investor significant financial uncertainty. Such situations raise serious questions about the advisor’s transparency, integrity, and adherence to regulatory guidelines. Unauthorized trading, if proven, is a serious breach of trust and often leads to significant financial losses for the investor.
It’s worth noting, however, that allegations are just that – allegations. They are not conclusive proof of wrong-doing. That being said, investors must be vigilant about reviewing their account statements and understanding the transactions made on their behalf.
The Financial Advisor’s Background, Broker Dealer and Past Complaints
Kristopher O’Hare, a broker registered with Merrill Lynch, Pierce, Fenner & Smith, has established himself in the financial field over the years. He has passed the Series 66 (Uniform Combined State Law Examination), SIE (Securities Industry Essentials Examination), and Series 7 (General Securities Representative Examination). His registration spans over 27 states, and he also operates as a registered investment adviser in Georgia and Texas.
Despite his credentials, the recent allegation of unauthorized trading highlighted in his BrokerCheck record brings attention to the importance of past complaints and their implications. In this case, the investor dispute adds an element of concern. While one complaint does not define a broker’s entire career, it is certainly a red flag that investors should heed.
Explanation in Simple Terms and the FINRA Rule
Unauthorized trading involves the broker conducting transactions without the client’s prior consent or knowledge. This practice is strictly regulated by the FINRA through Rule 3260, which limits brokers’ discretionary trading to pre-approved accounts. These accounts must have explicit consent for discretionary trading from both the client and the broker’s firm. Therefore, any discretionary trading occurring without such approval would be, by definition, unauthorized.
To further protect investors, FINRA Rule 2010 holds brokers to high standards of “commercial honor and just and equitable principles of trade.” Any unauthorized trading activity would also violate this principle, adding another layer of culpability.
Consequences and Lessons Learned
Stories like this draw attention to the adage of Benjamin Franklin – “An investment in knowledge always pays the best interest.” While it is the advisor’s responsibility to conduct authorized trading, investors should also equip themselves with a basic understanding of the trading mechanisms to protect their investments.
Recent studies show that 7% of financial advisors have been disciplined for misconduct, which adds a sobering perspective on this issue.
Unauthorized trading can result in substantial financial losses and erode trust. It also has legal consequences, such as fines and penalties for the brokers, who may also face disbarment from the securities industry.
Investors should consider any past complaints as a critical factor when choosing a financial advisor. Monitoring account activities and keeping an open line of communication with your advisor can also help detect any unauthorized transactions at an early stage. Furthermore, educating oneself about the basic regulatory guidelines and your rights as an investor can help prevent similar situations.
This incident serves as a stark reminder that even in the securities industry, it’s not just about choosing the right investments but also about selecting the right person to handle those investments.
