As a financial analyst and legal expert with over a decade of experience, I’ve seen my fair share of cases involving alleged misconduct by financial advisors. The recent complaint against Wally Davis, a New York City-based advisor with Oppenheimer & Company, is a prime example of the challenges investors face when dealing with unauthorized trading.
According to FINRA records, a client filed a complaint in May 2024, alleging that Mr. Davis made unauthorized and unsuitable investments in their accounts and failed to follow their instructions. The complaint, which sought unspecified damages, was ultimately denied by Oppenheimer & Company. In response, Mr. Davis stated, “The client’s allegations are meritless. The client signed documentation that outlined the objectives and risks of both investments, providing his authorization.”
This case highlights the importance of understanding the risks associated with giving your financial advisor discretionary authority over your investments. While many advisors act in their clients’ best interests, unauthorized trading can occur, leaving investors feeling betrayed and financially harmed.
The Advisor’s Background
Wally Davis has been in the securities industry for 37 years and has been registered with Oppenheimer & Company as a broker since 2003 and an investment advisor since 2016. His extensive experience and credentials, including passing four securities industry qualifying exams (Series 7, SIE, 63, and 65), may instill confidence in potential clients.
However, it’s essential to note that Mr. Davis has faced other investor complaints in the past. In 2022, a complaint alleged that he recommended unsuitable products while at Oppenheimer & Company, seeking damages of $92,000. This complaint was eventually withdrawn.
As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” This quote underscores the importance of thoroughly understanding your investments and the actions of your financial advisor.
Understanding FINRA Rules
FINRA, or the Financial Industry Regulatory Authority, is a self-regulatory organization that oversees the activities of brokerage firms and their employees. FINRA Rule 2010 requires brokers to observe high standards of commercial honor and just and equitable principles of trade. Unauthorized trading, which is the practice of making trades in a client’s account without their prior consent, violates this rule.
It’s worth noting that a staggering 7% of financial advisors have a history of misconduct, according to a 2019 study by the National Bureau of Economic Research. This statistic underscores the need for investors to remain vigilant and thoroughly vet their advisors.
Consequences and Lessons Learned
When a financial advisor engages in unauthorized trading, the consequences can be severe. Investors may suffer significant financial losses, and the advisor may face disciplinary action from FINRA, including fines, suspensions, or even a permanent ban from the securities industry.
For investors, the key takeaway is to stay informed and engaged with your investments. Regularly review your account statements, ask questions, and voice concerns if something doesn’t seem right. Remember, it’s your money, and you have the right to know how it’s being managed.
If you suspect that your financial advisor has engaged in unauthorized trading or other misconduct, don’t hesitate to reach out to a qualified securities attorney who can help you understand your rights and options for recovery.
