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Unauthorized Trades by Richard Crittenden at Janney Montgomery Scott Spark Investor Complaint

As a seasoned financial analyst and legal expert with over a decade of experience, I understand the gravity of investor complaints and the impact they can have on both individual investors and the broader financial market. The recent complaint against Richmond, Virginia financial advisor Richard Crittenden (CRD# 1190153) is a serious matter that deserves close attention.

According to the complaint filed in May 2024, Mr. Crittenden, while representing Janney Montgomery Scott, allegedly sold securities in an estate’s account without the executrix’s authorization, resulting in a loss of value. This pending complaint alleges unspecified damages, which could potentially be substantial given the nature of the alleged misconduct.

Unauthorized transactions are a clear violation of FINRA rules and can erode investor trust in their financial advisors and the market as a whole. FINRA Rule 2010 requires that financial advisors observe high standards of commercial honor and just and equitable principles of trade. Engaging in unauthorized transactions is a direct breach of this rule and can lead to serious consequences for the advisor and their firm.

Mr. Crittenden’s Background and Past Complaints

A review of Mr. Crittenden’s BrokerCheck report reveals that this is not the first investor complaint he has faced. In 2004, while representing Legg Mason Wood Walker, he was alleged to have made unauthorized trades, failed to follow instructions, and recommended unsuitable bond investments. Although this complaint, which alleged damages of $111,770.79, was ultimately denied, it raises concerns about a potential pattern of misconduct.

Mr. Crittenden’s profile on Janney Montgomery Scott’s website paints a picture of a dedicated and client-focused advisor. However, the recent complaint casts doubt on whether he has consistently acted in his clients’ best interests.

The Importance of Understanding FINRA Rules

For investors, it’s crucial to understand the rules and regulations that govern the conduct of financial advisors. FINRA Rule 2010, as mentioned earlier, sets a high standard for ethical behavior in the industry. Other key rules include:

  • FINRA Rule 2111: Requires that advisors have a reasonable basis to believe that their investment recommendations are suitable for their clients.
  • FINRA Rule 3260: Prohibits advisors from engaging in unauthorized trading in a client’s account.

By familiarizing themselves with these rules, investors can better protect their interests and hold their advisors accountable for any misconduct.

Consequences and Lessons Learned

The consequences of unauthorized trading and other forms of advisor misconduct can be severe. Investors may suffer substantial financial losses, and advisors can face disciplinary action from FINRA, including fines, suspensions, and even permanent barring from the industry.

As the famous investor Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.” This sentiment rings true in the financial advisory industry, where trust is paramount.

One startling fact underscores the importance of due diligence when selecting a financial advisor: according to a study by the Association of Certified Fraud Examiners, financial advisors who have a history of misconduct are five times more likely to engage in future misconduct compared to advisors with clean records.

The complaint against Richard Crittenden serves as a reminder that even advisors with seemingly impressive backgrounds can engage in misconduct. As an investor, it’s essential to thoroughly research any potential advisor, review their BrokerCheck report, and stay informed about the rules and regulations designed to protect your interests.

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