Former Ameriprise (AMP) Jack McBride has been ordered by the Financial Industry Regulatory Authority to pay a $12,500 fine and serve a 40-day suspension over alleged violations involving margin trades. He was registered with Ameriprise from 1994 to 2014.
FINRA contends that it was during this period that he committed a number of violations, including settling a customer complaint without telling Ameriprise, sending emails that had inflated account values to two clients, and mismarking order tickets as unsolicited when they had been solicited.
Regarding the margin trade violations, the regulator notes in the Letter of Acceptance, Waiver, and Consent that McBride settled with one couple by sending them almost $12,845 from his personal account rather than reporting their complaint to Ameriprise. The couple was charged margin interest after incurring a margin balance because McBride mistakenly bought $320K in securities for them using their Ameriprise account that did not have the balance to cover the cost. They had multiple accounts with the brokerage firm.
It was this couple to whom McBride purportedly sent summaries that inflated account values due to an error. Because of this, contends FINRA, for over a year McBride overstated account balances by $200K – $570K more than the accounts’ actual values. This means the account values on average were overstated by about $3.9M.
Also, said FINRA, in 2013, McBride recommended non-traditional exchange traded funds to four customers even though Ameriprise did not allow its representatives to recommend these securities. The customers made 14 purchases in these non-traditional ETFs. He then improperly recorded the transactions as “unsolicited.”
McBride, who, according to BrokerCheck, was let go by Ameriprise over company policy violations, is now a Wunderlich Securities broker. His record indicates that after McBride left Ameriprise, two customer disputes in which he was named and involved unsuitable inverse-leveraged ETFs and other ETFs were settled.
Ex-Ameriprise Broker Suspended Over Margins in an Older Investor’s Accounts
FINRA has also suspended another ex-Ameriprise Financial Services broker over margins involving customer accounts and older investors. Stuart Pearl is accused of liquidating securities in one senior investor’s account without getting the customer’s written consent, which is his former firm’s requirement. The customer had initially verbally consented to the liquidations.
According to the Letter of Acceptance, Waiver, and Consent, Pearl also is accused of recommending that two older customers buy about $122K of securities on margin. This caused a substantial increase in their margin debt balances in comparison to the money they had available. It wasn’t until they started investing with the ex-Ameriprise broker that they began to have margin debt.
The SRO said that the margin recommendations were not suitable for these investors, especially given that they were retired and had very specific investment goals, could only handle a certain degree of risk, and lacked experience with margin.
To settle with FINRA, Pearl is suspended for 45 days and must pay a $7,500 fine.
According to BrokerCheck, Ameriprise fired Pearl in 2015. He is currently affiliated with David A. Notes & Co. in Illinois.
Broker Fraud
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The FINRA Letter of Acceptance, Waiver, and Consent in the McBride Case (PDF)
The FINRA Letter of Acceptance, Waiver, and Consent in the Pearl Case (PDF)
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