South Florida Arbitration & Litigation Lawyer Blog
Mutual Fund, Variable and Fixed Annuity Fraud, Misrepresentation and Negligent Supervision FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.
December, 2011:
Guy Eugene Richardson (CRD #2926034, Reg. Representative, Topeka, Kansas) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Richardson failed to respond to FINRA requests for information. The findings stated that Richardson made similar misrepresentations to customers, all of whom wished to make conservative investments, about a certain corporate bond fund that he recommended to them. The fund did not provide a guaranteed dividend yield or rate of return; its objective, as stated in the fund’s prospectus, was to seek maximum current income through investment in a diversified portfolio of high-yield debt securities. In fact, the fund’s semi-annual report stated that the fund invested in junk bonds for which investors pay a premium because of the increased risk of loss, and that the bonds can be subject to greater price volatility than higher quality debt securities. Relying on Richardson’s recommendations, the customers invested approximately $317,000 in the fund. In addition, FINRA determined that Richardson made these misrepresentations without attempting to verify what he told the customers. Moreover, FINRA found that in an on-the-record interview with FINRA, Richardson testified that he believed at the time he made the misrepresentations that the fund did carry a guaranteed dividend yield, and that he recommended the fund to the customers because they wanted a higher return than was available in bank-sponsored products. Richardson admitted further that he did not review the fund’s prospectus or other documents available to him to verify his understanding of its dividend yield, and that he did not fully understand the product. (FINRA Case #2008016382401).