Broker barred for allegedly selling high-risk debt securities to elderly customers
It seems there have been a series of news reports about advisors being barred from the industry recently, and today we must report on another.
This time it’s the turn of David Escarcega, an advisor based in Phoenix, Arizona, who worked with Strategic Financial Partners. According to a report at WealthManagement.com, he placed 12 generally retired and senior customers into debentures which had been issued from GWG Holdings. The debentures paid out around 9.5 per cent over seven years of investment.
Reports in the publication suggest that Finra has now clamped down on the advisor alleging that Escarcega did not follow state security rules based on the sale of risky products: they are only deemed suitable for sale to those who are willing to gamble with their investments.
Finra suggests that Escarcega simply labelled the products as alternative investments and didn’t follow restrictions with regards to the size or income of these investments. Under Arizona rules, these investments should not surpass 10 per cent of the net worth of the investor – however, six of his clients purchased more than this limit.
In addition, it is alleged that Escarcega actually exaggerated one couple’s net worth so that they would meet the state’s minimum requirement levels for debentures.
Escarcega insists that his clients did not lose any money on their investments. Nevertheless, he has been hit with a $52,270 fine – the equivalent to commissions picked up from the sales – and barred from the industry.
This time it’s the turn of David Escarcega, an advisor based in Phoenix, Arizona, who worked with Strategic Financial Partners. According to a report at WealthManagement.com, he placed 12 generally retired and senior customers into debentures which had been issued from GWG Holdings. The debentures paid out around 9.5 per cent over seven years of investment.
Reports in the publication suggest that Finra has now clamped down on the advisor alleging that Escarcega did not follow state security rules based on the sale of risky products: they are only deemed suitable for sale to those who are willing to gamble with their investments.
Finra suggests that Escarcega simply labelled the products as alternative investments and didn’t follow restrictions with regards to the size or income of these investments. Under Arizona rules, these investments should not surpass 10 per cent of the net worth of the investor – however, six of his clients purchased more than this limit.
In addition, it is alleged that Escarcega actually exaggerated one couple’s net worth so that they would meet the state’s minimum requirement levels for debentures.
Escarcega insists that his clients did not lose any money on their investments. Nevertheless, he has been hit with a $52,270 fine – the equivalent to commissions picked up from the sales – and barred from the industry.
