Following a 16 day hearing before the Financial Industry Regulatory Authority (FINRA) , Brookstone Securities and several officers, including its owner Antony Lee Turbeville, were fined and ordered to pay restitution totally over $2.6 million dollars. A copy of the FINRA ruling can be viewed here.
Brookstone is a midsized independent broker-dealer headquartered in Lakeland, FL. The firm employs nearly 200 registered representatives (brokers) and has 45 branch offices.
The ruling concluded an action filed by FINRA alleging that Brookstone and the named individuals had violated Federal securities laws by making fraudulent misrepresentations and omissions of material fact in connection with the sales of complex, esoteric and risky tranches of collateralized mortgage obligations (CMO's). In addition to the fines and restitution, Turbeville and Christoper Kline were barred from association with any FINRA-regulated firm. David Locy, Brookstone's former chief compliance officer, was barred from acting in any supervisory or principal capacity with any FINRA-regulated firm and suspended for two years.
CMO's are very complicated investment products not generally suitable for the average investor. While Brookstone's officers testified that they believed CMO's to be suitable for retired persons seeking income, FINRA disagreed. If you take time to read the ruling, you will see that FINRA found Turbeville's and Kline's testimony not credible with regard to the explanations they purportedly provided to investors about CMO's.
If your broker suggests an investment strategy or product that you find difficult or impossible to understand, then that product may not be suitable for you. If your accountant or other trusted adviser cannot help you understand it, then perhaps you should pass on that opportunity.
If you have losses in CMO's or other stock market losses, you may be able to recover by filing an arbitration claim with FINRA. Contact us at 561 391 1900 for a free consultation about issues with your brokerage account.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.