As an experienced financial analyst and legal expert, I have seen my share of allegations against financial advisors over the years. The recent case involving Thad Allen, a broker registered with Smith Moore & Company, is particularly concerning given the seriousness of the claims.
Pending Dispute Alleges Removal of Funds
On August 22, 2024, an investor lodged a dispute alleging that funds were improperly removed from their account by Mr. Allen “to purchase gold to [sic] a third party.” The dispute, which is still pending, seeks substantial damages of $172,000. This is an alarming accusation that, if true, represents a major breach of fiduciary duty and ethical conduct by the advisor.
In my experience, cases involving the alleged misuse or misappropriation of client funds are among the most egregious. Investors place an enormous amount of trust in their financial advisors to always act in their best interests. Removing money from a client’s account to pay an outside third party, without authorization, is a serious violation of that trust.
In Statement, Broker Denies Allegations
Mr. Allen has appended a “Broker Statement” to the disclosure of this complaint on his record. In it, he provides additional details, referring to a “separate version of the complaint” filed with FINRA, the financial industry’s self-regulatory organization.
According to this version, the customer alleges that Mr. Allen “conspired with his brother… to induce the customer into transferring funds to a third party silver broker.” The funds were purportedly intended to purchase silver bars and coins, which the customer claims they never received. The statement concludes by noting Mr. Allen’s denial of the allegations.
While Mr. Allen is certainly entitled to respond to the complaint and proclaim his innocence, his statement honestly raises more questions than it answers, in my view. The accusation that he collaborated with a family member to persuade a client to transfer money for a silver investment that was allegedly never fulfilled is deeply troubling. It will be crucial to see how this matter unfolds.
As billionaire investor Warren Buffett once aptly stated, “It takes 20 years to build a reputation and five minutes to ruin it.” Allegations like these can be highly damaging to an advisor’s standing, even if later disproven. Reputation and trust mean everything in this business.
Past Dispute Alleged Unsuitable Mutual Fund
Notably, this is not Mr. Allen’s first brush with a customer complaint. In 2022, an investor alleged that he placed funds earmarked for a home purchase into an unsuitable, higher-risk mutual fund, resulting in a loss. His firm ended up settling the matter for nearly $8,000.
While the details are limited, this earlier dispute also centered around the suitability of an investment. Recommending inappropriate products is another common investor grievance that can potentially lead to losses and eroded trust in one’s advisor.
Did you know? Studies have found that 7-15% of financial advisors have a history of serious misconduct, and many remain in the industry even after facing disciplinary action. Thoroughly vetting an advisor’s background is critical. For more information on this startling statistic, Investopedia provides an insightful article.
What Is Smith Moore & Company?
Smith Moore & Company is an investment firm where Mr. Allen has been registered since 2022. The company touts its advisors’ ability to understand clients’ unique goals and implement customized strategies. However, cases like this underscore the importance of remaining vigilant and not blindly relying on marketing language.
Mr. Allen’s FINRA CRD# is 5644772. He has spent his entire 15-year career in Topeka, Kansas, having previously worked at Edward Jones from 2009-2022 before joining Smith Moore’s branch in that city.
Complaints about Thad Allen? MDF Law May Be Able to Help
As an analyst and legal specialist, my role is not to prematurely pass judgment on these allegations before all the facts emerge. Everyone deserves due process. However, if the claims are substantiated, the repercussions could be significant for Mr. Allen and his clients.
Current or former customers of Thad Allen who have concerns about their accounts are encouraged to discuss their legal options with an attorney. MDF Law is currently investigating this matter for any signs of irregularities or misconduct.
In my decades working at the intersection of finance and law, I have found that investor complaints often point to deeper issues worth examining. Firms like MDF Law that specialize in investment fraud and misconduct can be valuable resources and advocates for wronged investors.
The lesson for all of us is to thoroughly research any financial advisor before entrusting them with hard-earned money. Ask tough questions, scrutinize their history, and speak up if something seems amiss. Because when it comes to investments and life savings, there is zero room for unethical behavior.
