Regulator Bars WFG Investments Stockbroker For Suitability
Jay Dee Jordan, of Oklahoma City, Oklahoma, a stockbroker formerly registered with WFG Investments, Inc., has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he made unsuitable investment recommendations to the customer, effected unauthorized transactions in the customer’s account, mismarked customer order tickets, concealed customer complaints from his firm, and failed to comply with a FINRA investigation into allegations of his misconduct. Letter of Acceptance, Waiver and Consent, No. 2015046728802 (Aug. 14, 2017).
According to the AWC, from June 1, 2012, to March 31, 2016, hundreds of non-traditional exchange traded fund transactions were recommended by Jordan and ultimately placed in customer accounts despite the transactions failing to be suitable for customers. Apparently, Jordan was under the impression that a stock market collapse would ensue and that nontraditional exchange traded funds should be purchased by customers as a result. In that regard, he reportedly told customers that investing in non-traditional exchange traded funds would somehow provide them a benefit from equity value declines as well as protection from rising interest rates and the rising cost of oil.
For instance, Jordan recommended QID – a fund that sought to make two times the inverse of NASDAQ-100 Index’s daily performance; and TMV – a fund that sought three times the ICE United States Treasury Bond Index (20+ Year). The AWC noted other funds recommended by Jordan, which included VIXY, SDS, TBT, UGAZ, BOIL and UWTI – all of which were nontraditional exchange traded funds.
The AWC stated that non-traditional exchange traded funds were recommended by Jordan to be held by customers for prolonged holding periods in 2013 based upon his expectation of a market collapse. Despite the firm’s policies by this point requiring that customers furnish risk disclosures for investing in the alternative investments, Jordan failed to procure the documents from certain customers that he made recommendations to.
FINRA found that Jordan did not obtain a reasonable level of knowledge in reference to the non-traditional exchange traded funds before making recommendations to customers. Consequently, FINRA found that the risk factors were not understood by Jordan, and he did not comprehend that the non-traditional funds were meant to obtain objectives within one trading day. Further, he reportedly failed to understand that the products posed risks when held for prolonged periods. The AWC revealed that of the accounts affected, ten were established by customers mainly for purposes of capital preservation, thirty-one were established for conservative – moderate risk investing, and forty-one were created by customers who had a basic level of experience with investing.
In sum, the AWC reported that eighty-four of one-hundred and fifty-three accounts contained non-traditional exchange traded fund transactions that were effected by Jordan, where he made recommendations that customers collectively invest $22,000,000.00 of their investment funds in the products. Jordan reportedly earned $810,000.00 as a result of transactions effected due to his recommendations, while customers with longer than thirty day holding periods (seventy-nine of the eighty-four customer accounts) sustained unrealized and realized losses totaling $8,400,000.00. FINRA found that Jordan’s conduct was violative of FINRA Rules 2010, 2111 and NASD Rule 2310(a).
According to the AWC, Jordan was not authorized to effect trades in WFG accounts on a discretionary basis. Despite this, he reportedly exercised discretion in six customer accounts, in which he failed to gain customers’ consent in writing beforehand. Jordan even purportedly lied about his exercising of discretion, where he falsely represented on four occasions to his firm that he did not trade in customer accounts on a discretionary basis. Jordan’s conduct was found by FINRA to be violative of FINRA Rule 2010 and NASD Conduct Rule 2510(b).
Furthermore, a total of nine-hundred and twenty-seven customer orders pertaining to non-traditional exchange traded funds had been mismarked as unsolicited by Jordan; conduct violative of FINRA Rules 2010 and 4511. FINRA additionally found that Jordan violated FINRA Rules 4511 and 2010 by way of utilizing personal e-mail accounts to settle complaints from customers LM and BG away from the firm.
Following Jordan’s March 31, 2016, termination from WFG Investments, Inc., Jordan’s activities eventually became subject of a FINRA investigation. Particularly, on December 1, 2016, Jordan was sent a letter from FINRA calling upon him to provide information concerning his outside business activities involving customer CC. Jordan reportedly failed to provide FINRA staff with the information after several requests were made. FINRA found Jordan’s failure to cooperate in that regard to be violative of FINRA Rules 2010 and 8210.
FINRA Public Disclosure reveals that Jordan has been subject of fourteen customer initiated investment related disputes pertaining to allegations of his wrongdoing while he was associated with WFG Investments, Inc., Painewebber, Inc., and RBC Dain Rauscher Inc. Particularly, on July 13, 2016, a customer filed an investment related written complaint involving Jordan’s conduct, where the customer requested $42,000.00 in damages based upon allegations that he effected stock transactions in the customer’s account that were neither authorized nor suitable for the customers.
On November 23, 2016, another customer filed an investment related arbitration claim regarding Jordan’s activities in which the customer sought more than $5,000.00 in damages based upon allegations including failure to supervise and unsuitable investment recommendations in reference to the customer’s over-the-counter equities transactions. Subsequently, on December 19, 2016, a customer filed an investment related written complaint regarding Jordan’s activities, wherein the customer requested $83,484.68 in damages grounded upon allegations that Jordan omitted material information about the customer’s investments, and effected inappropriate equity trades in the customer’s account.
Then, on March 8, 2017, three customers filed investment related arbitration claims involving Jordan’s conduct, in which the customers sought a total of $7,700,000.00 in damages based upon allegations against Jordan of suitability in reference to equity investments. Further, on March 16, 2017, a customer filed an investment related written complaint regarding Jordan’s activities, where the customer requested $750,000.00 in damages based upon allegations that from 2011 to 2016, Jordan made unsuitable investment recommendations to the customer.
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