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The allegations against Tom Swan are deeply concerning for any investor. Since 2020, six groups of investors have filed disputes against Mr. Swan that his firm ultimately settled. These disputes alleged misrepresentations, negligence, and unsuitable recommendations, primarily involving corporate bond investments. The fact that Western International Securities paid over $200,000 to settle these claims suggests the allegations had merit and substance. Any accusation of broker misconduct is serious, but a pattern of similar complaints from multiple parties raises major red flags about Mr. Swan’s practices.
For investors, the safety and integrity of their portfolios is paramount. Brokers are bound both legally and ethically to make suitable recommendations in line with their clients’ goals and risk tolerance. Misrepresenting investments or acting negligently is a profound violation of the trust investors place in financial professionals. The fallout can be devastating – unsuitable investments may underperform, incur losses, or lock up funds needed for other purposes. Beyond just the financial impact, such alleged misconduct shatters investors’ faith in the person managing their hard-earned money.
Tom Swan entered the securities industry in 1987 with First American National Securities. Over his 35-year career, he has been registered with several firms before joining Western International Securities in 2008, where he remains to this day. Based out of Westlake Village, California, Mr. Swan holds 6 industry licenses including Series 6 and 66. Investors can view his full CRD (Central Registration Depository) record on FINRA’s BrokerCheck website.
While a lengthy tenure can often reflect an advisor’s experience and qualifications, in Mr. Swan’s case it also provides a longer record of disclosures. In addition to the 6 recent customer disputes, his record shows other concerning events:
- In 2022, the SEC alleged in an administrative action that Mr. Swan and other brokers unsuitably sold high-risk GWG L Bonds to clients whose profiles did not support such speculative investments. Mr. Swan was ordered to pay over $12,000 in disgorgement.
- In 2019, a client alleged Mr. Swan made an unauthorized transaction in their account. Though the $12,000 claim was denied by his firm, investors should know a denial does not necessarily mean a complaint was baseless.
FINRA, the Financial Industry Regulatory Authority, maintains rules governing broker conduct. A few key standards apply to Mr. Swan’s alleged actions:
- Suitability (Rule 2111): Brokers must have a reasonable basis to believe an investment fits a client’s profile, taking into account factors like risk tolerance, objectives, and financial situation.
- Misrepresentations (Rule 2020): Brokers cannot make untrue statements or omit facts that would make other statements misleading.
- Unauthorized Trading (Rule 3260): Brokers must receive authorization from the client before making trades in their non-discretionary accounts.
When regulators like FINRA or the SEC take action against a broker, they may order them to pay disgorgement – turning over profits obtained from improper conduct. Receiving such an order does not reflect well on a broker’s integrity. Even when a firm denies an investor complaint, it does not necessarily vindicate the advisor – clients can still pursue arbitration or legal action if they believe their claim has merit.
As famed investor Warren Buffett once cautioned, “Risk comes from not knowing what you’re doing.” For the average investor, navigating complex products and strategies requires guidance from a knowledgeable, trustworthy financial professional. But as the allegations against Mr. Swan demonstrate, not all brokers put their clients’ interests first. By misrepresenting risks, recommending unsuitable products, or trading without authorization, unethical advisors put portfolios in jeopardy.
One sobering statistic underscores the prevalence of this issue: in 2021 alone, FINRA barred nearly 400 brokers for misconduct and ordered over $45 million returned to harmed investors. Though regulatory efforts aim to weed out bad actors, investors must stay vigilant to safeguard their financial well-being. According to a Forbes article, some common signs of potential investment fraud or bad advice include promises of guaranteed returns, pressure to act quickly on an opportunity, and a lack of clear explanations about the investment’s risks and strategy.
If you suffered losses due to unsuitable or misrepresented investments from Tom Swan or any other financial advisor, it’s essential to explore your options. Consulting with experienced attorneys who specialize in investment fraud and misconduct cases can help you understand your rights and potential remedies. Don’t hesitate to seek guidance if you suspect your trust has been violated. Protecting your financial future is paramount, and holding bad actors accountable helps prevent harm to others.
