Oppenheimer Broker Sanctioned For Churning Unit Investment Trusts
Brian Douglas Engstrom (also known as Brian Douglas Cordes) of Pensacola Florida a stockbroker formerly registered with Oppenheimer Co. Inc. has been fined $5,000.00 and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he provided bad investment recommendations to his customers concerning their unit investment trust rollovers during the time that Engstrom was associated with Oppenheimer. Letter of Acceptance Waiver and Consent No. 2018057247101 (Apr. 20, 2020).
The AWC stated that from July 1, 2011 to December 31, 2015, unit investment trusts were traded by Engstrom on a short term basis in customer accounts. The AWC stated that the customers’ unit investment trusts contained twenty-four month maturities but had only been held for three hundred ninety-three days on average before the customers were advised by the stockbroker to liquidate their positions and use the proceeds for purchases of other unit investment trusts.
Oppenheimer customers were advised by Engstrom in more than one thousand occasions to rollover their initial unit investment trusts months prior to their maturities. FINRA stated that five hundred early rollovers involved a unit investment trust being rolled over into a new unit investment trust that was contained in a subsequent series.
The AWC stated that in one case a customer had been advised to purchase a unit investment trust whose strategy consisted of making investments in securities generating a stable source of income as well as securities which could appreciate in value during periods of inflation. FINRA stated that the unit investment trust aimed to achieve an above average total return and had a twenty-four month maturity. Only thirteen months after purchase the customer was advised by Engstrom to sell the position and buy another unit investment trust in a subsequent series. FINRA indicated that the strategy and the objective of the newer unit investment trust was the same if not remarkably similar to the unit investment trust that the customer had initially held.
FINRA determined that Engstrom provided bad investment advice given the increased costs borne by customers for successive unit investment trust purchases as well as the frequency in which those transactions were effected. The AWC stated that Engstrom’s unsuitable recommendations were violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure also reveals that a customer filed an investment related complaint involving Engstrom’s conduct in which the customer requested $9,000.00 in damages based upon allegations that unsuitable exchange traded fund transactions were effected in the customer’s account by Engstrom during the time that he was associated with Oppenheimer.
On October 20, 2016, Engstrom was terminated by Oppenheimer based upon his questionable trading in a customer’s account. Between October 20, 2016 and April 3, 2020, he was registered with Stifel Nicolaus Company Inc.