Erez Law recently filed a FINRA arbitration against International Assets Advisory, LLC. The Erez Law client alleges that Michael Spolar (CRD# 2192992), who was a registered representative of International Assets Advisory, LLC, implemented a speculative and unsuitable investment strategy without authorization from the customer that produced devastating results.
Erez Law alleges that the couple entrusted Spolar with all of their securities investments that also represented the majority of their irreplaceable retirement savings. The couple was risk averse, conservative investors who were looking to generate a modest degree of income while preserving their irreplaceable retirement savings. The couple was not looking for high risk investments or speculative investment strategies. The Erez Law clients are alleging damages in excess of $200,000.
It is alleged that Spolar employed competing options trading strategies, implementing both bullish (speculating that the market will go out) and bearish (speculating a decline in the market) strategies, sometimes simultaneously. In some instances, Spolar’s strategy required the use of margin in the customers’ trust account. This strategy is speculative and unsuitable for elderly, unsophisticated and conservative retirees who were looking for safe and secure investments that would preserve their principal throughout retirement.
Additionally, Erez Law alleges that Spolar’s failure to adequately diversity the customers’ trust account with suitable investments prevented them from earning a reasonable rate of return on their retirement savings. A reasonably designed and professionally managed portfolio would have incurred significant gains during the same time period. Additionally, it is alleged that Spolar did not adequately disclose or explain the risks of implementing competing options trading strategies.
In addition to unauthorized and extremely risky options trading strategies, Spolar is alleged to invest the clients’ funds heavily in an iron-ore mining called Cliffs Natural Resources without authorization, a financially troubled company. Cleveland-Cliffs, Inc., formerly Cliffs Natural Resources, is a Cleveland, Ohio firm that specializes in the mining and beneficiation of iron ore. In December 2017, Cliffs Natural Resources (CLF) traded on the NYSE for $6.75, down from a high of $37.65 in February 2013. As of October 5, 2018, it trades for $12.28.
Spolar was registered with International Assets Advisory, LLC in Orlando, Florida from April 2015 to November 2017, when he was terminated regarding, “Contacted clients during suspension.” Previously, Spolar was registered with LPL Financial LLC in Beachwood, Ohio from 2013 to 2015 before he was terminated regarding, “Discretionary trading in brokerage accounts in violation of firm policy.” And, he was registered with Morgan Stanley in Pepper Pike, Ohio from 2009 to 2013.
In June 2018, FINRA suspended Spolar for one month after he consented to the sanction and to the entry of findings that without seeking or obtaining approval from his member firm, he issued nine personal checks, totaling approximately $2,100, to a customer in an effort to reimburse the customer for losses the customer sustained in his options investments. According to FINRA, “The findings stated that Spolar expressed dismay with the losses that the customer had incurred and unilaterally offered to begin making monthly payments to him in amounts approximately equal to the monthly return that the lost principal would have earned had it been invested in a high-yield bond fund, until the losses were recouped.”
In May 2017, Spolar was suspended by FINRA for one month after he consented to the sanction and to the entry of findings that he exercised discretion in customers’ accounts that were non-discretionary accounts without authorization from his member first. According to the Acceptance, Waiver & Consent (AWC), “while Spolar was a registered representative at a firm, he stated that he discussed strategy with these clients, including the specific securities and quantities to be purchased, and that he received verbal authority for the trades. However, on at least some occasions, Spolar executed the transactions in the days following receipt of verbal authority.” FINRA also found that while Spolar was registered with his new firm, he continued to exercise discretion in customer accounts.
Regrettably, Spolar’s illicit and improper conduct in connection with the customers’ account is not an isolated incident. Spolar has been the subject of 10 customer complaints between 2003 and 2018, according to his CRD report. Recent complaints include:
- March 2018. “Claimants allege unsuitable recommendations and margin trading at LPL.” The case is currently pending.
- December 2017. “Claimant alleges unsuitable recommendations and margin trading while at LPL.” The case was settled for $65,000.
- March 2017. “Recommendation of unsuitable stocks, without authorization, caused losses (time period 2010-2014).” The customer sought $101,000 in damages and the case was settled for $57,000.
- December 2016. “Recommendations of unsuitable stocks, unauthorized trades (time period 2013-2014).” The customer sought $115,000 in damages and the case was settled for $101,500.
- August 2016. “Unsuitable and unauthorized investments caused losses. Activity period 2013-2015.” The customer sought $350,000 in damages and the case was settled for $40,000.
- January 2016. “Client alleges that Mr. Spolar forged new account documentation and recommended unsuitable investment products based on the client’s previous goals and objectives.” The customer sought $109,000 in damages and the case was settled for $30,000.
- December 2015. “Recommendation of unsuitable stocks, unauthorized trading (time period March ’13 to December ’14).” The customer sought $169,848.37 in damages and the case was settled for $140,000.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, International Assets Advisory, LLC may be liable for investment or other losses suffered by Spolar’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.