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FINRA Barred The GMS Group, LLC Financial Advisor Jason Figueroa

Posted on Thursday, April 27th, 2017 at 8:46 am    

Erez Law is currently investigating The GMS Group, LLC financial advisor Jason Figueroa (CRD# 5062799) regarding unsuitable trading in nontraditional exchange traded funds (ETFs) in customer accounts. Figueroa was registered with The GMS Group, LLC in Boca Raton, Florida from 2006 to 2015. FINRA barred Figueroa from acting as a broker or otherwise associating with firms that sell securities to the public.

In October 2015, FINRA barred Figueroa after he consented to the sanction that he recommended and engaged in unsuitable trading in nontraditional ETFs in customer accounts. Figueroa was managing the investment portfolio for four unsophisticated and retired investors with limited investment experience and a moderate risk tolerance. Figueroa revised their investment strategy from investing in corporate bonds and mutual funds to leverage and inverse-leveraged ETFs and related exchange-traded notes. Figueroa held non-traditional ETFs in the four customers’ accounts for more than one trading day on 118 occasions.

ETFs are typically registered unit investment trusts (UITs) or open-end investment companies whose shares represent an interest in a portfolio of securities that track an underlying benchmark or index. Leveraged ETFs seek to deliver multiples of the performance of the index or benchmark they track. Inverse ETFs seek to deliver the opposite of the performance of the index or benchmark they track, profiting from short positions in derivatives in a falling markets. Wells Fargo sold billions of dollars of these ETFs to customers, some of whom held them for extended periods of time when the markets were volatile. Leveraged and inverse ETFs have certain risks not found in traditional ETFs, such as the risks associated with a daily reset, leverage and compounding.

Figueroa employed the use of leverage in the customer accounts, which increased the risk substantially. Leverage is the use of financial instruments or borrowed capital to increase the potential return of an investment. Figueroa also did not conduct adequate due diligence concerning the risks associated with these investments. Additionally, Figueroa used discretion to execute trades in 14 customer accounts without disclosing these actions to or getting authorization from The GMS Group or obtaining written authorization from the customers.

Figueroa has been the subject of nine customer complaints between 2009 and 2016, according to his CRD report:

May 2016. “Misrepresentation regarding the purchase of Puerto Rico Highway and Transportation. And Infrastructure bonds.” The customer sought $85,267 in damages and the case was denied.

November 2015. “Time period: 10/01/11-04/01/15; Customer Claims; unsuitable investments, fraud, breach of fiduciary duties, breach of contract, negligence.” The client is seeking $750,000 in damages and the case is currently pending.

December 2013. “Fraud,breach of fiduciary duty, negligent supervision,breach of contract
Damage amount requested.” The client sought $300,000 in damages and the case was settled for $142,500.

November 2013. “The client alleges negligence, misrepresentation, breach of fiduciary duty, deception, exploitation, unauthorized trades, during the period of April 2013 – September 2013.” The client sought $250,000 in damages and the case was settled for $150,000.

August 2013. “The client alleges an unauthorized investment in her account for the period March 2013 to July 2013.” The client sought $20,000 in damages and the case was settled for
$9,000.

August 2013. “The client alleges unauthorized and unsuitable investments in his account for the period March 2013 to July 2013.” The client sought $300,000 in damages and the case was settled for $125,000.

February 2009. “Client alleges negligence, fruadulent (sp) sales practices and intentional broker misconduct during the period January 2007 to July 2008.” The client sought $30,000in damages and the case was settled for $5,000.

February 2009. “The client alleges fraudulent sales practices, intentional broker misconduct and negligence during the period December 2007 to September 2008.” The client sought $400,000 in damages and the case was settled for $75,000.

February 2009. “The client alleges negligence, fruadulent (sp) sales practices and intentional broker misconduct during the period February 2007 until November 2008.” The client sought $85,000 in damages and the case was settled for $12,500.

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, The GMS Group, LLC may be liable for investment or other losses suffered by Figueroa’s customers.

Erez Law represents investors in the United States for claims against The GMS Group, LLC financial advisor Jason Figueroa, who is alleged to use discretion in customer accounts and recommend an unsuitable investment strategy concentrated in nontraditional exchange traded funds (ETFs). If you were a client of The GMS Group, LLC financial advisor Jason Figueroa or another firm, 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.