As a former financial advisor and legal expert with over a decade of experience in both sectors, I’ve seen my fair share of investor complaints and regulatory violations. The recent allegation against Los Angeles financial advisor Randy Moshtael is a serious one, with the pending complaint alleging damages of $400,000. According to FINRA records, Mr. Moshtael is registered as a broker and an investment advisor with Oppenheimer & Company.
The complaint, filed in October 2024, alleges that Mr. Moshtael failed to maintain and handle a customer’s account based on their instructions to not let the value fall below $250,000. He also allegedly charged excessive commissions. This type of conduct, if proven true, not only harms the individual investor but also erodes trust in the financial advisory industry as a whole.
It’s worth noting that this isn’t the first complaint against Mr. Moshtael. An earlier investor complaint, filed in 2015, alleged that he “made excessive, unauthorized and unsuitable futures trades” in the customer’s account while representing Oppenheimer & Company. That complaint reached a settlement of $97,500 in 2016.
As an industry veteran, I know that past complaints can be a red flag for potential future misconduct. It’s crucial for investors to thoroughly research their financial advisors, including checking their FINRA BrokerCheck report, before entrusting them with their hard-earned money.
The Financial Advisor’s Background and Broker Dealer
Randy Moshtael holds an impressive 41 years of securities industry experience. Based in Los Angeles, California, he has been registered as a broker and an investment advisor with Oppenheimer & Company since 2003. His past registrations include well-known firms such as Morgan Stanley, Salomon Smith Barney, and Lehman Brothers.
Despite his extensive experience and credentials, including the passage of six securities industry qualifying exams, the recent complaint raises concerns about his conduct and the oversight provided by his current employer, Oppenheimer & Company.
Understanding FINRA Rules and Investor Protection
The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization that oversees the conduct of financial advisors and brokerage firms. FINRA Rule 2111 requires that financial advisors have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer, based on the customer’s investment profile.
In simple terms, this means that financial advisors must:
- Know their customers and their financial situations
- Make recommendations that align with their customers’ goals and risk tolerance
- Avoid excessive trading or churning of accounts to generate commissions
When advisors fail to adhere to these rules, they put their clients’ financial well-being at risk and may face serious consequences.
Consequences and Lessons Learned
The potential consequences for financial advisors who engage in misconduct can be severe, including:
- Fines and penalties imposed by FINRA and other regulatory bodies
- Suspension or permanent barring from the securities industry
- Civil lawsuits filed by aggrieved investors seeking damages
- Reputational damage that can be difficult to overcome
As the famous investor Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
This case serves as a reminder for investors to remain vigilant and to thoroughly vet their financial advisors. It also underscores the importance of working with advisors who prioritize their clients’ best interests and adhere to the highest ethical standards.
According to a study by the University of Chicago, approximately 7% of financial advisors have misconduct records. While the vast majority of advisors are honest and hardworking, it’s crucial to stay informed and to speak up if you suspect wrongdoing.
As a former financial advisor and legal expert, my mission is to educate and empower investors to make informed decisions and to hold bad actors accountable. Together, we can work towards a more transparent and trustworthy financial system.
