Options for Clients of Former David A. Noyes & Company Broker Stuart Pearl
Posted on Wednesday, August 5th, 2020 at 8:44 pm
There are options for clients of former David A. Noyes & Company broker Stuart Pearl (CRD# 1500833) who suffered investment losses. Pearl was registered with David A. Noyes & Company in Indianapolis, Indiana from 2015 to 2019 when he was terminated regarding “Stuart Pearl resigned while on heightened supervision. He had not followed his heightened supervision plan and would have been terminated had he not resigned.”
In July 2021, FINRA sanctioned Pearl to pay a $5,000 civil and administrative penalty and fine and suspended him for three months after he “consented to the sanctions and to the entry of findings that he recommended the purchase of leveraged and inverse traded funds (collectively Non-Traditional ETFs or NT-ETFs) to four customers without having a sufficient understanding of the risks and features associated with these products and hereby having a reasonable basis to make these recommendations. The findings stated that Pearl recommended nine NT-ETS purchases to four customers at the firm. All of these transactions were solicited. The customers held these positions for periods ranging from about 100 to 600 days, with the average holding period approximately 400 days. These extended holding periods caused Pearl’s customers to incur approximately $80,000 in losses. Pearl failed to perform a reasonable basis suitability analysis of NT-ETFs to understand the unique features and specific risks associated with these products before offering them to his customers. In fact, the prospectus for the NT-ETFs that Pearl recommended warned that the products were very risky, intended to be utilized only by knowledgeable investors who understood the features and risks associated with NT-ETFs, and should be actively and frequently monitored on a daily basis. Moreover, Pearl did not understand that losses in NT-ETFs are compounded because of how the valuations reset each day.”
In November 2017, FINRA suspended Pearl for 45 days and sanctioned him to a civil and administrative penalty and fine of $7,500 after he, “consented to the sanctions and to the entry of findings that he effected securities transactions in a customer’s account on several occasions on a discretionary basis without prior written authorization from the customer and without prior written acceptance of the account as discretionary from his member firm. The findings stated that on May 14, 2015, Pearl used discretion to liquidate positions in six different securities with a total principal amount of approximately $20,000, on behalf of the customer, a senior investor. Although the customer had authorized Pearl to execute these liquidations in discussions that took place prior to May 14, 2015, Pearl failed to speak with the customer again on May 14, 2015, to confirm the customer’s authorization to make these sales. The findings also stated that Pearl made unsuitable recommendations in two other customers’ joint brokerage account when he recommended the customers use margin to effect several trades. The recommendations made by Pearl to purchase securities on margin were unsuitable in light of the customers’ investment objectives, risk tolerances, and their financial situation and needs. As a result of those purchases, the customers experienced a significant increase in their margin debt balances in relation to their available funds and their account was subject to seven margin calls during the relevant period.”
Pearl has been the subject of five customer complaints between 2002 and 2020, according to his CRD report. Recent complaints are regarding:
May 2020. “Customers allege that the representative had created a margin trading account without discussing with them.” The customer sought $2,088,124 in damages and the case was settled for $70,000. The complaint was regarding common and preferred stocks.
March 2019. “March 2019- Registered representative put on a large hedge position in customer’s account without the customer’s knowledge.” The customer sought $85,000 in damages and the case was settled for $42,500. The complaint was regarding common and preferred stocks and ETFs.
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, David A. Noyes & Company may be liable for investment or other losses suffered by Pearl’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you 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.