As a financial analyst and legal expert with over a decade of experience, I’ve seen my fair share of cases involving financial advisors who engage in questionable practices. The recent claim filed by Carlson Law against LaSalle St. Securities and financial advisor Sam Jacobs of Key Investment Group is a prime example of the serious consequences that can arise from such behavior.
According to the claim, Jacobs allegedly engaged in highly speculative trading in a customer’s accounts, resulting in losses of $217,000—approximately 29% of the accounts’ values—during a time when the stock market was rising. The investments in question included foreign companies like Mobile Telesystems and Gazprom of Russia, HK Electric Investments Ltd. of Hong Kong, several companies that went public via SPAC, and other risky stocks, such as Silicon Valley Bank.
As an investor, it’s crucial to understand the potential impact of such allegations. When a financial advisor engages in unsuitable or unauthorized trading, it can lead to significant losses and erode trust in the financial industry as a whole. It’s important to thoroughly research any potential investments and ensure that your financial advisor is acting in your best interests.
The Financial Advisor’s Background and Past Complaints
Sam Jacobs holds 31 years of securities industry experience and has been registered as a broker with LaSalle St. Securities since 2004. He is also the President of Key Investment Group. According to his profile on the firm’s website, Jacobs began his career with a firm that raised capital for initial public offerings, where he “developed a very successful business” and served as a top broker for nine years before founding Key Investment Group in 2004.
While Jacobs’ extensive experience may seem impressive, it’s essential to also consider any past complaints or regulatory actions. Investors can research a financial advisor’s background using FINRA‘s BrokerCheck tool, which provides information on an advisor’s employment history, licenses, and any disclosed complaints or disciplinary actions.
Understanding FINRA Rules and the Consequences of Violations
FINRA, or the Financial Industry Regulatory Authority, is a self-regulatory organization that oversees the activities of broker-dealers and their registered representatives. FINRA rules are designed to protect investors and maintain the integrity of the financial markets.
In this case, the alleged actions of Sam Jacobs may violate several FINRA rules, including:
- FINRA Rule 2111: Known as the “suitability rule,” this requires brokers to have a reasonable basis for believing that a recommended investment or strategy is suitable for the customer based on their investment profile.
- FINRA Rule 2020: This rule prohibits brokers from engaging in manipulative, deceptive, or other fraudulent devices or contrivances in connection with the purchase or sale of any security.
Violations of FINRA rules can result in serious consequences for financial advisors, including fines, suspensions, or even permanent barring from the securities industry. For investors who have suffered losses due to a broker’s misconduct, filing a claim through FINRA arbitration or civil litigation may be a means of seeking recovery.
Lessons Learned and Protecting Your Investments
The case involving Sam Jacobs and Key Investment Group serves as a reminder of the importance of thoroughly vetting your financial advisor and understanding the risks associated with your investments. As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.”
To protect yourself and your investments, consider the following tips:
- Research your financial advisor’s background and disciplinary history using FINRA’s BrokerCheck.
- Ensure that you fully understand any recommended investments or strategies, including the associated risks and fees.
- Regularly review your account statements and question any unauthorized or suspicious activity.
- Diversify your portfolio to minimize the impact of any single investment or sector.
It’s worth noting that, according to a study by the University of Chicago, roughly 7% of financial advisors have a history of misconduct. While the vast majority of advisors operate ethically, it’s crucial to remain vigilant and proactive in protecting your financial well-being.
If you believe that you have suffered investment losses due to the misconduct of a financial advisor, don’t hesitate to seek legal guidance. Firms like Carlson Law specialize in representing investors in claims against financial advisors and investment firms, and can help you understand your rights and options for recovery.
