As a former financial advisor and legal expert with over a decade of experience in both sectors, I’ve seen firsthand the impact that allegations of misconduct can have on investors. The recent complaint against Chicago-based financial advisor Jon Urbach is a prime example of the seriousness of such allegations and the potential consequences for all parties involved.
According to records from the Financial Industry Regulatory Authority (FINRA), the complaint against Mr. Urbach alleges that his actions resulted in damages exceeding $426,000. The complaint, filed in July 2024, specifically claims that while representing Fidelity Brokerage Services, Mr. Urbach made an improper referral to an unaffiliated advisor. This pending complaint serves as a reminder of the importance of thoroughly vetting financial advisors and understanding their background and any past complaints.
The Financial Advisor’s Background and Broker Dealer
Jon Urbach holds 17 years of securities industry experience and is currently registered as a broker with Fidelity Brokerage Services and an investment advisor with Fidelity Personal and Workplace Advisors. His past registrations include Strategic Advisors and Fidelity Investments Institutional Services Company. Mr. Urbach has passed several securities industry qualifying exams, including:
- General Securities Sales Supervisor – Options Module Examination (Series 9)
- General Securities Sales Supervisor – General Module Examination (Series 10)
- Investment Company Products/Variable Contracts Representative Examination (Series 6)
- General Securities Representative Examination (Series 7)
- Securities Industry Essentials Examination (SIE)
- Uniform Securities Agent State Law Examination (Series 63)
- Uniform Combined State Law Examination (Series 66)
Despite his credentials, the recent complaint against Mr. Urbach underscores the importance of due diligence when selecting a financial advisor. As the famous investor Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Understanding FINRA Rules and the Allegation
FINRA, the self-regulatory organization overseeing broker-dealers in the United States, has strict rules in place to protect investors from misconduct. The allegation against Mr. Urbach likely falls under FINRA Rule 2111, which requires brokers to have a reasonable basis for believing that an investment recommendation is suitable for the customer, based on the customer’s investment profile.
By allegedly making an improper referral to an unaffiliated advisor, Mr. Urbach may have violated this rule and put his client’s investments at risk. It’s crucial for investors to understand these rules and their rights when working with a financial advisor.
Consequences and Lessons Learned
The consequences of advisor misconduct can be severe, both for the advisor and the affected investors. In addition to potential disciplinary action from FINRA, advisors may face civil lawsuits and reputational damage. Investors, on the other hand, may suffer significant financial losses and emotional distress.
This case serves as a reminder of the importance of thoroughly researching financial advisors and their backgrounds before entrusting them with your investments. A startling financial fact: 7% of financial advisors have a misconduct record, according to a 2019 study by the National Bureau of Economic Research.
As an investor, it’s essential to:
- Check an advisor’s background and disciplinary history using FINRA’s BrokerCheck tool
- Ask questions about an advisor’s investment philosophy, fees, and potential conflicts of interest
- Diversify your investments to minimize risk
- Regularly monitor your accounts and statements for any suspicious activity
By staying informed and proactive, investors can better protect themselves from potential misconduct and safeguard their financial futures.
