As a former financial advisor and legal expert with over a decade of experience, I’ve seen my fair share of investor complaints and unsuitable investment recommendations. The recent allegations against Louisville, Kentucky financial advisor Jonathan Upton (CRD# 4559794) are serious and could have significant consequences for both the advisor and the affected investors.
According to the Financial Industry Regulatory Authority (FINRA) records, Mr. Upton faces multiple investor complaints alleging that he recommended unsuitable investments while working as a representative of LPL Financial. The most recent complaint, filed in October 2024, claims damages of $250,000 related to unsuitable recommendations in real estate investment trusts (REITs) and business development corporations (BDCs). Another complaint from December 2023 alleges damages of $75,000 due to unsuitable variable annuity and structured note products.
These allegations are concerning for investors, as unsuitable investment recommendations can lead to significant financial losses. When a financial advisor recommends an investment that is not appropriate for a client’s risk tolerance, investment objectives, or financial situation, it can have devastating consequences. As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.”
The Financial Advisor’s Background and Broker-Dealer
Jonathan Upton has been in the securities industry for 20 years and is currently registered as a broker with LPL Financial and an investment advisor with Keystone Financial Group. His past registrations include LPL Financial and NatCity Investments. Mr. Upton holds several securities industry qualifications, including:
- General Securities Principal Examination (Series 24)
- Securities Industry Essentials Examination (SIE)
- General Securities Representative Examination (Series 7)
- Investment Company Products/Variable Contracts Representative Examination (Series 6)
- Uniform Securities Agent State Law Examination (Series 63)
Despite his experience and qualifications, the recent complaints against Mr. Upton are not his first. His BrokerCheck report discloses several past investor complaints, which is a red flag for investors considering working with him.
Understanding FINRA Rules and Unsuitable Investments
FINRA Rule 2111 requires financial advisors to have a reasonable basis to believe that a recommended investment or investment strategy is suitable for the customer, based on the customer’s investment profile. This profile includes factors such as the customer’s age, financial situation, risk tolerance, and investment objectives.
When a financial advisor recommends an unsuitable investment, they are violating this rule and putting their clients’ financial well-being at risk. Unsuitable investments can include products that are too risky for a client’s risk tolerance, do not align with their investment goals, or are not appropriate given their financial situation.
Consequences and Lessons Learned
The consequences of unsuitable investment recommendations can be severe for both the investor and the financial advisor. Investors may face significant financial losses, while advisors can face disciplinary action from FINRA, including fines, suspensions, or even a permanent bar from the securities industry.
It’s worth noting that, according to a study by the University of Chicago, approximately 7% of financial advisors have a history of misconduct, and these advisors are five times more likely to engage in future misconduct than the average advisor.
As an investor, it’s crucial to thoroughly research any potential financial advisor before entrusting them with your hard-earned money. Review their background, qualifications, and disciplinary history using resources like FINRA’s BrokerCheck. Don’t hesitate to ask questions and ensure that you fully understand any recommended investments before making a decision.
Remember, as the old saying goes, “Trust, but verify.” While most financial advisors are honest and have their clients’ best interests at heart, it’s always wise to remain vigilant and informed when it comes to your investments.
