As a former financial advisor and legal expert with over a decade of experience, I’ve witnessed firsthand the devastating impact that unauthorized trading can have on investors. The recent complaint against Miami-based financial advisor Marco Oreamuno is a stark reminder of the importance of vigilance and due diligence when entrusting your hard-earned money to a professional.
According to FINRA records, Mr. Oreamuno, who is currently registered with Bolton Global Capital, allegedly engaged in unauthorized trading, exposed his client to concentration risk, failed to communicate effectively, and deviated from the agreed-upon portfolio strategy. The pending complaint seeks damages of $140,000, a substantial sum that could have serious implications for the investor’s financial well-being.
This isn’t the first time Mr. Oreamuno has faced accusations of misconduct. In 2016, while employed by Morgan Stanley, he was the subject of a complaint alleging that he failed to advise a client about a contingent deferred sales charge. The complaint was settled in 2018 for $34,999.96.
The Seriousness of Unauthorized Trading
Unauthorized trading is a grave violation of the trust that investors place in their financial advisors. It occurs when a broker makes trades in a client’s account without obtaining prior consent or authorization. This practice not only undermines the client’s autonomy but also exposes them to potentially significant losses.
In Mr. Oreamuno’s case, the alleged unauthorized trading is compounded by claims of concentration risk and a deviation from the agreed-upon portfolio strategy. Concentration risk arises when a disproportionate amount of an investor’s assets are allocated to a single security, sector, or asset class, leaving them vulnerable to market fluctuations. By straying from the established investment plan, an advisor can jeopardize their client’s financial goals and risk tolerance.
As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” When a financial advisor engages in unauthorized trading and disregards the client’s objectives, they are essentially gambling with someone else’s money – a recipe for disaster.
The Importance of Due Diligence
The complaint against Mr. Oreamuno underscores the need for investors to thoroughly vet their financial advisors before entrusting them with their assets. One essential tool in this process is FINRA’s BrokerCheck, which provides information on a broker’s employment history, licenses, and any past disciplinary actions or customer complaints.
By reviewing Mr. Oreamuno’s BrokerCheck record, investors can see that he has been the subject of two complaints over the course of his 19-year career. While not all complaints are indicative of wrongdoing, a pattern of accusations should raise red flags and prompt further investigation.
It’s also crucial for investors to understand the rules and regulations that govern the financial industry. FINRA Rule 2010, for example, requires brokers to observe high standards of commercial honor and just and equitable principles of trade. Unauthorized trading is a clear violation of this rule, as it puts the advisor’s interests ahead of the client’s.
The Consequences of Misconduct
Financial advisors who engage in unauthorized trading and other forms of misconduct face serious consequences, including fines, suspensions, and even permanent barring from the industry. In addition to regulatory penalties, they may also be subject to civil lawsuits and criminal charges, depending on the severity of their actions.
For investors who have fallen victim to unauthorized trading or other types of financial misconduct, the road to recovery can be long and challenging. Many opt to pursue legal action against their advisor and the employing firm, seeking to recoup their losses and hold the responsible parties accountable.
However, the best defense against financial misconduct is a proactive approach. By thoroughly researching potential advisors, staying engaged in the management of their portfolios, and speaking up when something doesn’t seem right, investors can minimize their risk of falling prey to unscrupulous practices.
It’s worth noting that while stories like Mr. Oreamuno’s tend to dominate the headlines, the vast majority of financial advisors are honest, hardworking professionals who prioritize their clients’ best interests. In fact, according to a study by the National Bureau of Economic Research, only about 7% of financial advisors have a history of misconduct.
Nevertheless, the complaint against Mr. Oreamuno serves as a sobering reminder of the trust we place in our financial advisors and the devastating consequences that can result when that trust is violated. As investors, it’s our responsibility to remain vigilant, informed, and proactive in the stewardship of our financial futures.
