As a former financial advisor and legal expert with over a decade of experience in both sectors, I’ve seen my fair share of cases involving alleged misconduct by financial professionals. The recent termination of Poughkeepsie, New York financial advisor Johnathan Sawaged (CRD# 7061837) from his former firm, B. Riley Wealth Management, is a serious matter that could have significant implications for investors.
According to Sawaged’s BrokerCheck report, he was fired from B. Riley Wealth Management in September 2024 due to allegations that he “inappropriately handled client payments while working for an affiliated Tax Services entity.” While the disclosure provides limited details about the specific misconduct, any mishandling of client funds is a grave concern that warrants further investigation.
As an investor, it’s crucial to understand the potential consequences of such allegations. Misappropriation of client funds not only violates the trust between a financial advisor and their clients but also breaches various industry regulations and laws. Such misconduct can lead to disciplinary action by regulatory bodies like FINRA and the SEC, as well as legal repercussions and reputational damage for the advisor and their firm.
Sawaged’s Background and Past Complaints
Johnathan Sawaged has five years of experience in the securities industry, having worked with B. Riley Wealth Management from 2022 to 2024 and National Securities Corporation from 2019 to 2022. He is currently registered as an investment advisor with Quint Investments and Insurance in Poughkeepsie, New York.
A review of Sawaged’s BrokerCheck report reveals no prior disclosures or complaints, making the recent termination from B. Riley Wealth Management his first reported incident of alleged misconduct.
Understanding FINRA Rules and Consequences
FINRA, the self-regulatory organization overseeing the securities industry, has strict rules in place to protect investors and maintain the integrity of financial markets. FINRA Rule 2150 specifically prohibits the improper use of client funds, stating that no member firm or associated person shall:
- Make improper use of a customer’s securities or funds;
- Fail to observe high standards of commercial honor and just and equitable principles of trade; or
- Engage in any manipulative, deceptive, or fraudulent act or practice.
Violating this rule can result in serious consequences for financial advisors, including:
- Fines and penalties
- Suspension or permanent barring from the securities industry
- Referral to law enforcement agencies for criminal prosecution in cases of fraud or theft
Lessons Learned and Protecting Your Investments
The allegations against Johnathan Sawaged serve as a reminder of the importance of thoroughly vetting your financial advisor and staying vigilant about your investments. As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.”
To protect yourself and your financial future, consider the following steps:
- Research your financial advisor’s background and disciplinary history using FINRA’s BrokerCheck and the SEC’s Investment Adviser Public Disclosure database.
- Regularly review your account statements and question any suspicious activity or unauthorized transactions.
- Diversify your investments across multiple advisors or firms to minimize the impact of potential misconduct by any one individual.
It’s worth noting that while the vast majority of financial advisors are honest and ethical professionals, a small percentage engage in misconduct. In fact, a 2019 study by the University of Chicago found that approximately 7% of financial advisors have a history of misconduct.
As the case of Johnathan Sawaged unfolds, it serves as a cautionary tale for investors to remain diligent and proactive in managing their financial relationships. By staying informed and taking appropriate precautions, you can better protect your investments and financial well-being.
