Emily Carter here. I’ve been riding the rapid currents of finance and law for over a decade. In my line of work, I’ve borne witness to some astonishingly bad practices. Most recently, a broker named Walter Paul Shoczolek III of Cornelius, North Carolina has drawn my attention.
The Seriousness of Allegations and Its Effect on Investors
Let’s begin with an overview of exactly why Shoczolek piqued my interest. As per the Financial Industry Regulatory Authority (FINRA), Shoczolek has a few stains on his record – blemishes that warrant closer inspection.
Specifically, on September 13, 2023, an Avantax Investment Services Inc. client accused Shoczolek of unauthorized liquidation of her investment. The unauthorized trading incident, where the supposed liquidation of her investment happened without her approval, is undeniably alarming. This alleged malpractice has marred the investor’s financial ground, causing her damages on mutual funds. Consequently, she is seeking compensation taking up to a whopping $500,000 from either Avantax Investment Services Inc. or Shoczolek.
Background of the Financial Advisor
It’s important to note that Walter Shoczolek isn’t a rookie. According to FINRA BrokerCheck, CRD: 4488009, he has been actively involved in the industry since 2015, working for Avantax Investment Services Inc. As an industry veteran, one would expect Shoczolek to be well-versed in the rules and laws that govern his practice. This makes this case even more baffling.
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Alas, this isn’t Shoczolek’s first time under scrutiny. A previous complaint alleges that he didn’t properly inform a client about the investments made in her account, which led to significant damages on her mutual funds. This case was settled by Avantax compensating the client in the sum of $30,423.63. Yet, Shoczolek carries on, still linked to one of the esteemed brokerage firms.
Fathom the FINRA Rule
Maybe you’re wondering, what is this all about and what does the FINRA rule say? Well, as Warren Buffet once stated, “It’s only when the tide goes out that you discover who’s been swimming naked.” Essentially, FINRA rules exist to ensure brokers keep their swimsuits on.
FINRA Rule 2111 – also known as the Suitability Rule – states explicitly that a financial advisor must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer. The rule also imposes explicit disclosure requirements regarding risks and costs associated with the investments.
Consequences and Lessons Learned
This case isn’t closed yet, but it has undoubtedly served as a valuable lesson about the importance of transparency and thorough communication in financial transactions. From an investor’s perspective, it reinforces the importance of having a trustworthy and reliable financial advisor.
A shocking statistic from the Public Investors Advocate Bar Association (PIABA) found that 44% of brokers with five or more disclosures on their record are still in business. This fact highlights the necessity of diligent homework while selecting an advisor. Take note of any red flags, such as a spotty track record or a history of legal skirmishes.
At the end of the day, investor trust and broker reliability are the pillars supporting the financial sector. It’s vital to ensure that these foundations remain strong, requiring mutual respect, professionalism, and an unwavering adherence to ethical standards. These stories remind us to stay vigilant and attentive, safeguarding the hard-earned money we entrust to these financial advisors.
Remember, as an investor, it’s your right and responsibility to question your financial advisor and ensure you’re always in the loop regarding your investments. If that trust gets breached, restitution should follow swiftly and justly.
