There are certain standards and practices that most financial institutions and their representatives are required to adhere to. For instance, advisors are generally prohibited from engaging in private securities transactions not approved by their firm. Another major restriction is that advisors are not allowed to either loan money to their clients or receive loans from clients. Unfortunately, there are a number of brokers around the country who constantly violate some of these standards. According to FINRA, the case of Aaron Parthemer is another example of a broker who has gone rogue.
THE VIOLATIONS
On April 23, 2015, the Financial Industry Regulatory Authority (FINRA) banned Aaron Parthemer—a Miami-based Wells Fargo Advisors financial advisor—permanently from the securities industry. According to the FINRA settlement, Mr. Parthemer conducted a number of outside business activities that he did not disclose to his former employers Morgan Stanley or Wells Fargo, such as the part ownership of a dance club in South Beach.
The FINRA settlement establishes that from 2009-2013 Mr. Parthermer failed to disclose his business interests in Club Play; an Internet-based startup company; and a tequila marketing firm. Most concerning, however, is the fact that FINRA alleges Mr. Parthemer made a number of loans to clients, which is a major restriction in the financial industry. Specifically, FINRA indicated that Parthemer allegedly loaned close to $400,000 to three professional athletes who were co-owners at the club. He allegedly did the same for some of his customers at Wells Fargo, in blatant violation of FINRA standards.
Parthemer’s actions appear not to have stopped there. Like many rogue advisors, Mr. Parthemer allegedly advised his clients to invest more than $3 million in the Internet branding start-up “GVC”, which was operated by one of his friends.
HARMFUL TO INVESTORS
Brokers that fall into this kind of behavior greatly harm investors especially because they only look after their own interests. When investors are steered by an advisor towards investments not approved by their firm, they are at a much greater risk of losing their entire investment. This is because most of these investments turn out to be highly speculative and sometimes even schemes.
PRECAUTIONS INVESTORS SHOULD TAKE
As an investor, you should always verify that the investments being pitched by your financial professional are approved by the financial institution, fit with your risk tolerance, and are consistent with the investor’s overall financial needs. If at any time you feel that your broker/advisor has acted in a negligent manner, you should seek legal counsel immediately.
The Attorneys of the Vernon Litigation Group represents investors throughout the United States who have suffered considerable losses for negligent and/or fraudulent behavior caused by rogue or negligent brokers.
Contact the Vernon Litigation Group if you are concerned about the circumstances under which any significant investments were offered and sold to you by any financial institution or financial advisor.