FINRA Sanctions Georgia-based Broker Scott Bremus for Unethical Sales Practices Amid Investor Complaints

Scott Michael Bremus (CRD #4073006), a seasoned broker working from Dacula, Georgia, is facing accusations of sales practice misconduct. The charges, while serious, are not his first. According to BrokerCheck, several investors have raised complaints about his questionable sales practices, reflecting a somewhat troubling history.

Understanding the Allegations against Bremus

The most recent allegation against Bremus takes us back to October 6, 2023, when the Financial Industry Regulatory Authority (FINRA) issued a ruling against him on account of private securities transactions; specifically, FINRA’s findings led to an Acceptance Waiver & Consent (AWC) reference number 2021073072701.

FINRA’s investigation revealed that Bremus had facilitated a private securities transaction without providing advance written notice to his then-employer, LPL Financial LLC. More concerning, the transaction involved two of his firm’s clients who were introduced by Bremus to another registered representative.

The ramifications far exceeded a simple breach of procedure. The firm’s clients, a married couple, were introduced to another associate to discuss an investment opportunity in a company. However, the covert actions of the representative, now known to have a concealed track record of outside business activities (OBAs), created a spiderweb of deceit.

Under the auspices of Bremus, the clients were persuaded to invest $300,000, transferred via two wire transactions made under false pretenses. Bremus continued to maintain that he neither solicited nor recommended the investment.

Understanding the Consequences

Bremus faced a six-month suspension from professional practice starting from October 16, 2023, and ending on April 15, 2024, and a hefty fine of $10,000. However, it’s not the professional reputation alone that suffers from such actions. It’s also the trust of the general public and investors.

As the celebrated investor Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.” Misguided practices can lead to a loss of investor trust, which can be near impossible to recover, and even worse, the investors themselves suffered substantial financial losses.

Indeed, the 2019 Study on Investment Adviser Misconduct by the Securities Litigation and Consulting Group found that clients working with advisors who have a history of misconduct are 68% more likely to experience asset depreciation or losses. Financial advisors, after all, are there to guide us through the intricacies of financial markets and safeguard our investments, not deplete them.

Past Allegations and Broker History

Regrettably, this is not the first-time Bremus faced criticism for his actions. A variable annuity investment in December 2006 led to a complaint against him, accusing him of misrepresentation. The claim from a Morgan Stanley Smith Barney client resulted in a settlement of $60,000 in damages, which was paid to the client.

Several years later, on June 30, 2008, a Citigroup Global Markets Inc. client also accused Scott Bremus of misrepresentations of material fact causing them to sustain losses on their variable annuities. Although the client’s claim was denied, it marked another blemish on Bremus’s record.

Decoding the FINRA Rule and its Implications

For those unfamiliar, the FINRA Rule 3280 necessitates that any broker intending to take part in private securities transactions must provide written notice to their employing firm. The notice must detail the proposed transaction and the broker’s role in it. It should also indicate whether the broker has received or will receive selling compensation.

However, this rule wasn’t adhered to in Bremus’s case. His failure to comply not only violated the industry’s standards but also exposed his clients to unnecessary risks from unvetted investments.

Consequences and Lessons Learned

Investing, as we know, can be fraught with risks. But that doesn’t mean we should be exposing ourselves to additional and avoidable financial dangers. When a financial advisor fails to follow established regulations, trust is severely undermined, and the potential for loss increases exponentially.

In this instance, both Bremus and his clients paid the price for his failure to comply – him with a fine and suspension, and his clients with lost savings. It serves as a prudent reminder that trustworthiness is key in elevating confidence in financial advisors and the wider financial industry.

If you’ve experienced losses due to Scott Bremus or have reason to raise questions about any other broker’s conduct, don’t hesitate to engage the appropriate channels to protect your assets and have your concerns addressed.

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