As a seasoned financial analyst and legal expert, I’ve seen my fair share of misconduct cases in the finance industry. The recent allegations against former financial advisor Reuben Lamont Brown are serious and concerning for investors. According to FINRA records, Brown was barred from associating with any FINRA member firm after refusing to appear for testimony during an investigation into his termination from Edward Jones for allegedly selling away.
Selling away refers to when a financial advisor recommends investments that are not approved or offered by their employing brokerage firm. This is a violation of FINRA Rule 3280 and can lead to significant losses for unsuspecting investors. In Brown’s case, his former firm filed a Form U5 indicating he had introduced clients to an outside investment, breaching the firm’s policies on private securities transactions and selling away.
The seriousness of these allegations cannot be overstated. Investors trust their financial advisors to recommend suitable, vetted investments that align with their goals and risk tolerance. When an advisor steps outside the bounds of their firm’s approved offerings, they expose clients to potentially fraudulent or high-risk investments without proper due diligence.
For investors who may have been impacted by Brown’s alleged misconduct, it’s crucial to understand your rights and options for recourse. Brokerage firms have a legal obligation to supervise their advisors and ensure they adhere to industry regulations. If a firm fails in this duty, they may be liable for investor losses.
Looking into Reuben Brown‘s background, a few red flags emerge. Prior to his termination from Edward Jones, Brown had only been in the securities industry since 2019. Additionally, he has been the subject of two other disclosures:
- In July 2023, a client alleged Brown suggested an outside investment with “zero risk and zero tax” that resulted in an additional $30,000 tax liability. The dispute settled for $210,000.
- In August 2022, Brown was discharged from Edward Jones amid concerns he had introduced clients to an outside investment, violating FINRA Rule 3280.
As famed investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” In cases of selling away, advisors often prey on clients’ trust and lack of financial sophistication to push unsuitable, unapproved investments.
It’s worth noting that, according to a 2021 study by the North American Securities Administrators Association, selling away was one of the top five most reported complaints against financial advisors. This highlights the prevalence of this type of misconduct in the industry.
For investors who suspect their advisor may have engaged in selling away or other misconduct, the first step is to research their background using FINRA’s BrokerCheck tool. This free database provides information on an advisor’s employment history, licenses, and any public disclosures or complaints.
If you believe you’ve fallen victim to selling away or other investment fraud, don’t hesitate to seek legal counsel from an experienced securities attorney. They can help you understand your rights and pursue any available remedies, such as FINRA arbitration or litigation.
The allegations against Reuben Brown serve as a stark reminder of the importance of due diligence when selecting a financial advisor. By staying informed and vigilant, investors can protect themselves from falling prey to unscrupulous practices like selling away.
