As a former financial advisor and legal expert with over a decade of experience, I understand the gravity of the allegations against Robert De Vita. The complaint, filed in June 2024, accuses Mr. De Vita of breaching his fiduciary duty, violating Illinois securities law, acting negligently, and violating Regulation Best Interest in connection with the sale of GWG L-bonds while representing Ausdal Financial Partners. The pending complaint alleges damages of $25,000, which is a significant sum for any investor.
It’s crucial for investors to understand the seriousness of these allegations and how they may impact their investments. When a financial advisor is accused of violating securities laws and industry rules, it raises questions about their integrity, professionalism, and ability to act in the best interests of their clients. As the famous investor Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.” This quote underscores the importance of trust in the financial industry and how quickly that trust can be eroded by misconduct.
According to his BrokerCheck report, Robert De Vita has been in the securities industry for 35 years and has been registered with Ausdal Financial Partners since 2010. He holds several securities industry qualifications, including the Series 7, 24, 63, and 65 exams. While his extensive experience may suggest a level of expertise, it’s important to note that even seasoned professionals can engage in misconduct.
In fact, a study by the University of Chicago found that approximately 7% of financial advisors have a history of misconduct, and that prior offenders are five times more likely to engage in new misconduct than the average financial advisor. This statistic highlights the importance of thoroughly researching a financial advisor’s background and regulatory history before entrusting them with your investments.
Understanding FINRA Rules and Regulations
The complaint against Mr. De Vita specifically mentions a violation of Regulation Best Interest, which is a rule implemented by the Securities and Exchange Commission (SEC) in June 2020. This rule requires broker-dealers and their associated persons to act in the best interest of their retail customers when making recommendations about securities transactions or investment strategies.
Under Regulation Best Interest, financial advisors must:
- Disclose all material facts about the relationship and recommendations, including conflicts of interest
- Exercise reasonable diligence, care, and skill when making recommendations
- Establish, maintain, and enforce policies and procedures reasonably designed to address conflicts of interest
- Comply with the “Care Obligation” by having a reasonable basis to believe that a recommendation is in the customer’s best interest
Violating these requirements can result in disciplinary action by FINRA, the SEC, or state securities regulators. In severe cases, financial advisors may face fines, suspensions, or even permanent bars from the securities industry.
Consequences and Lessons Learned
The consequences of financial advisor misconduct can be far-reaching, both for the advisor and their clients. Investors who have suffered losses due to a financial advisor’s negligence or wrongdoing may be able to recover damages through FINRA arbitration or legal action. However, the process can be lengthy, costly, and emotionally draining.
For financial advisors, the consequences of misconduct can be career-ending. In addition to potential fines and suspensions, advisors may face reputational damage that makes it difficult to attract and retain clients. As the saying goes, “trust takes years to build, seconds to break, and forever to repair.”
The complaint against Robert De Vita serves as a reminder of the importance of due diligence when selecting a financial advisor. Investors should always research an advisor’s background and regulatory history using resources like FINRA’s BrokerCheck and the SEC’s Investment Adviser Public Disclosure database. It’s also essential to ask questions, understand the products and strategies being recommended, and never feel pressured to make investment decisions.
As a former financial advisor and legal expert, my goal is to educate and empower investors to make informed decisions about their financial futures. By understanding the risks and responsibilities involved in working with a financial advisor, investors can better protect themselves and their hard-earned savings.
