There are options for customers of former Next Financial Group, Inc. financial advisor Joseph Cotter (CRD# 1263122). Cotter was registered with Petersen Investments, Inc. in Charlotte, North Carolina from March 2016 to May 2017, when he was terminated regarding, “On April 21, 2017 FINRA notified Mr. Cotter that examination #20160493163 was being referred to its Enforcement Division for further review.” Previously, he was registered with Next Financial Group, Inc. in Charlotte, North Carolina from 2008 to 2016, when he was terminated regarding, “The firm conducted an internal review of the trading activity in a customer’s accounts and found the level of trading activity to be excessive in light of the customer’s profile and the character of the account.”
In November 2017, Cotter was suspended from FINRA for nine months and sanctioned to $15,000 in civil and administrative penalties and fines and $100,549.42 in disgorgement. Cotter consented to the sanctions and to the entry of findings that he engaged in excessive, unsuitable trading in the accounts of one customer, and he exercised de facto control over an IRA account and a second account of a customer. The FINRA investigation found that the customer routinely accepted Cotter’s recommendations, and she was an unsophisticated investor. Cotter used this control to excessively trade the accounts in a manner that was inconsistent with the customer’s investment objectives, financial situation, and needs. The trading generated net commissions of $100,549.42 and the customer’s accounts experienced losses of $391,893. The customer was in her 60s and had a conservative risk tolerance, and thus the recommendations were unsuitable.
Cotter has been the subject of two customer complaints between 1986 and 2016, according to his CRD report. The most recent case involved:
June 2016. “[Customer] alleged Mr. Cotter mismanaged funds in her brokerage account at Next Financial during the period 2013 through 2016. Alleged damages of $625,000. This matter was settled according to an amended U-5 by Mr. Cotter’s former firm, Next Financial, for $328,646.00 on 1/23/17.” The customer sought $625,000 in damages and the case was settled for $328,646.
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, Next Financial Group, Inc. may be liable for investment or other losses suffered by Cotter’s customers.
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