As a former financial advisor and legal expert with over a decade of experience, I’ve seen my fair share of cases where investors have been misled or taken advantage of by unscrupulous advisors. The recent complaint against Chris Martin, a financial advisor with Archangel Financial Services in Apple Valley, California, is a prime example of the serious consequences that can result from such misconduct.
According to the complaint filed in August 2024, Mr. Martin allegedly engaged in a range of improper activities, including:
- Misrepresenting a private placement offering
- Providing untrue statements
- Acting negligently
- Breaching his fiduciary duty
- Committing financial elder abuse
These allegations, if proven true, represent a grave violation of the trust that investors place in their financial advisors. Private placement offerings, in particular, can be complex and risky investments that require careful consideration and thorough disclosure of all relevant facts. By allegedly misrepresenting such an offering and providing untrue statements, Mr. Martin may have led his clients to make investment decisions that were not in their best interests.
Moreover, the accusation of financial elder abuse is especially concerning. As a society, we have a responsibility to protect our most vulnerable citizens from those who would take advantage of them. If Mr. Martin did indeed engage in such abuse, it would be a reprehensible breach of his professional and moral duties.
It’s worth noting that Mr. Martin has defended himself against these allegations, describing them as “false” and “baseless.” He maintains that he did not act as a financial advisor or owe any fiduciary duty to the complainants in relation to their investments in a separate company. However, the fact remains that FINRA has made a preliminary determination to recommend disciplinary action against him for participating in undisclosed and unapproved private securities transactions.
The Advisor’s Background and Past Complaints
A closer look at Mr. Martin’s background reveals that he has been in the securities industry for 24 years and has been registered with Centaurus Financial since 2006. While he holds an impressive array of licenses and qualifications, including the Series 7, Series 24, and Series 66 exams, this is not the first time he has faced scrutiny for his professional conduct.
In September 2024, FINRA launched an investigation into Mr. Martin’s alleged participation in undisclosed and unapproved private securities transactions. This investigation remains pending and could result in disciplinary action against him.
As renowned investor Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.” The allegations against Mr. Martin, if substantiated, could have severe and lasting consequences for his career and his clients’ financial well-being.
Understanding FINRA Rules and the Consequences of Violation
To grasp the severity of the allegations against Mr. Martin, it’s important to understand the role of FINRA and the rules that govern financial advisors’ conduct. FINRA is a self-regulatory organization that oversees the broker-dealer industry and is responsible for protecting investors and maintaining market integrity.
One of the key rules that FINRA enforces is the prohibition on “selling away” – that is, engaging in private securities transactions without the knowledge and approval of the advisor’s firm. This rule is designed to ensure that firms can properly supervise their advisors’ activities and protect investors from unsuitable or fraudulent investments.
If Mr. Martin is found to have violated this rule, as the pending FINRA investigation suggests, he could face serious penalties, including fines, suspension, or even a permanent bar from the securities industry. Moreover, his alleged misconduct could open him up to civil liability from investors who suffered losses as a result of his actions.
It’s a sobering fact that, according to a 2021 FINRA study, more than 60% of investors who suffered losses due to misconduct by their financial advisors never recover their full losses. This underscores the importance of thoroughly vetting any potential advisor and staying vigilant for signs of impropriety.
Lessons Learned and Moving Forward
The case of Chris Martin serves as a cautionary tale for investors and a reminder of the critical importance of due diligence when entrusting one’s financial future to an advisor. It also highlights the vital role that regulators like FINRA play in protecting investors and holding bad actors accountable.
As an investor, there are steps you can take to minimize your risk of falling victim to misconduct by a financial advisor:
- Research any potential advisor thoroughly, including checking their FINRA BrokerCheck report for past complaints or disciplinary actions
- Be wary of investments that seem too good to be true or pressure to invest quickly
- Don’t be afraid to ask questions and demand clear, thorough explanations of any proposed investments
- Trust your instincts – if something doesn’t feel right, walk away
For financial advisors, the lesson is clear: adherence to ethical standards and regulatory requirements is not optional. The consequences of misconduct can be severe and far-reaching, impacting not only the advisor’s career but the financial well-being of their clients.
As the case against Chris Martin unfolds, we can only hope that justice will be served and that any wrongdoing will be appropriately punished. In the meantime, let this serve as a reminder to all of us in the financial industry of the sacred trust placed in us by our clients and the importance of always putting their interests first.