Understanding the Allegations
As a financial analyst and legal expert, my role is often to untangle complex issues and present clear, useful information. In this case, I’m focusing on the allegations brought against Gihan Anil Fernando (CRD#: 4469669), a registered broker currently registered with Cetera Investment Services, LLC in Houston, TX.
These allegations aren’t just theoretical. Importantly, they affect real investors – possibly people just like you – and their financial future. According to the Financial Industry Regulatory Authority (FINRA), Fernando has been hit with a serious allegation. A customer has claimed that certain product features were misrepresented during the sales process between February and August 2018, resulting in a pending damage request of $100,000.
A Closer Look at Fernando’s Background
Fernando is no newcomer to the lucrative world of finance. In fact, he entered the securities industry in 2002. Previous to his association with Cetera Investment Services, LLC, he worked with well-known firms such as Morgan Stanley, and BOK Financial Securities, Inc.
Unfortunately, there appears to be a trend of customer disputes associated with Fernando. His record includes a whopping 26 other customer disputes, many of which allege misrepresentation of certain product features during the sales process. These disputes have resulted in settlements well into the tens and hundreds of thousands.
Breaking Down the FINRA Rule
Moving into the realm of rules and regulations, our focus falls on the core principles that govern financial advisors’ conduct. As Warren Buffett once quipped, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Broadly, there are two parts to the FINRA Rule – Reasonable basis suitability and Customer-specific suitability. Reasonable basis suitability requires advisors to undertake due diligence to understand the investment’s risks and rewards. They’re also responsible for ensuring that the investment strategy is suitable for at least some investors.
Customer-specific suitability, as the name suggests, requires that the recommended investment is suitable for the specific customer based on their individual investment profile. This includes considerations such as the investor’s age, tax status, time horizon, liquidity needs, risk tolerance, financial situation, investment objectives, and many other criteria revealed by the customer.
Here’s a sobering fact. According to a report by the U.S. Securities and Exchange Commission, bad financial advisors had cost American consumers more than $17 billion per year in overcharges before proper regulations were in place.
Consequences and Lessons Learned
Given the severity of the allegations and recorded history of customer disputes, the consequences for Fernando could be significant. However, the larger concern here lies in safeguarding investors and ensuring that they are not victims of unsuitable financial advice. After all, bad advice can lead to sizable losses, missed opportunities, and financial stress.
Most poignantly, if allegations of misrepresentation are substantiated, this could potentially lead to a breach of trust and confidence that is vital for healthy client-advisor relationships. Moreover, it’s a clear reminder that investors should always do their homework, ask probing questions, and pursue clarity before making any decisions.
In conclusion, scrutinizing the credentials, conduct, and customer feedback of advisors is of paramount importance in navigating the world of investments. Reliance on a well-vouched reputation and credible expertise can serve as an effective safeguard against getting entangled in unsuitable investment strategies.
In the words of the acclaimed finance guru Peter Lynch, “Know what you own, and know why you own it.” Knowledge is indeed our most potent defense in the dynamic landscape of financial investments. For more information about Fernando, his career, and complaints against him, I encourage you to visit his FINRA BrokerCheck page.
