As a seasoned financial analyst and legal expert with over a decade of experience in both sectors, I’ve seen my fair share of complex cases involving the intersection of finance and law. The recent disciplinary action against Brett Butler, a former broker registered with Pruco Securities in Evansville, Illinois, is one that raises serious concerns for investors.
According to a Letter of Acceptance, Waiver, and Consent released by the Financial Industry Regulatory Authority (FINRA) on October 23, 2024, Mr. Butler allegedly:
- Took a total of $1.175 million in loans from five customers at his member firm between 2016 and 2020
- Did not disclose the loans to his firm nor receive its approval, violating firm rules and industry regulations
- Falsely attested on five firm questionnaires that he had not taken loans from customers
These actions demonstrate a blatant disregard for the trust that clients place in their financial advisors. Taking undisclosed loans from customers is not only unethical, but it also violates FINRA Rule 3240, which requires brokers to seek and obtain firm approval for such arrangements. Furthermore, providing false information on compliance questionnaires breaches the high standards of commercial honor mandated by FINRA Rule 2010.
As renowned investor Warren Buffett once said, “Trust is like the air we breathe. When it’s present, nobody really notices. But when it’s absent, everybody notices.” Mr. Butler’s alleged misconduct erodes the trust that is essential to the advisor-client relationship.
Butler’s Background and Disciplinary History
With 23 years of experience as a broker, Mr. Butler has worked for several firms, including IDS Life Insurance, ONB Investment Services, AllState Financial Services, and most recently, Pruco Securities. He holds the Series 7 and Series 66 licenses.
Notably, this is not the first complaint against Mr. Butler. In 2013, an investor alleged that he conducted unauthorized withdrawals and “conspired” with the customer’s father and co-trustee to conceal the withdrawals. His former firm settled that dispute for $120,000.
A concerning fact: Roughly 1 in 13 financial advisors have a misconduct record, underscoring the importance of thoroughly vetting your advisor and staying vigilant. According to a Bloomberg analysis, investment fraud and bad advice from financial advisors cost Americans up to $17 billion per year.
Consequences for Brett Butler and Lessons for Investors
As a result of FINRA’s findings, Mr. Butler faces a five-month suspension from associating with any FINRA member firm and a $5,000 fine. While these penalties hold him accountable, they do little to compensate clients who may have suffered losses or had their trust betrayed.
This case serves as a stark reminder for investors to:
- Regularly review your accounts and question any unfamiliar transactions
- Verify your advisor’s background and disciplinary history through FINRA’s BrokerCheck
- Promptly report any suspected misconduct to your advisor’s firm and regulatory authorities
If you were a client of Brett Butler and have concerns about your accounts, I encourage you to discuss your situation with a knowledgeable attorney. You may have grounds to pursue a FINRA arbitration claim to recover any improper losses. However, be aware that your time to file a claim is limited, so swift action is crucial.
As an advocate for investor rights, my mission is to provide the expert guidance needed to navigate these complex matters. With the right legal strategy, it is possible to hold unscrupulous advisors accountable and secure the financial recovery you deserve.
Remember, knowledge is power. Stay informed, engaged, and proactive in monitoring your investments. Together, we can work to protect your hard-earned assets and demand the integrity you expect from those entrusted with your financial well-being.
