FINRA Reportedly Suspends Advisor Stuart Pearl after Allegations of Unsuitable ETF Recommendations
According to public records posted on July 1, 2021, the Financial Industry Regulatory Authority (FINRA) has reportedly suspended Stuart L. Pearl (CRD #1500833) from the securities industry for three months and fined him $5,000.
FINRA’s findings stated that “Stu” Pearl allegedly recommended the purchase of leveraged and inverse traded funds (Non-Traditional ETFs) to four customers without having a sufficient understanding of the risks and features associated with these products.
According to FINRA, Pearl purportedly recommended and solicited nine Non-Traditional ETF purchases to four customers at the firm. The customers allegedly held these positions for periods ranging from about 100 to 600 days, with the average holding period approximately 400 days. These extended holding periods reportedly caused Pearl’s customers to incur approximately $80,000 in losses.
Pearl allegedly failed to perform a reasonable basis suitability analysis of Non Traditional ETFs to understand the unique features and specific risks associated with these products before offering them to his customers, according to FINRA. The prospectus for the NT-ETFs warned that the products were very risky, intended to be utilized only by knowledgeable investors who understood the features and risks associated with them and should be actively and frequently monitored on a daily basis.
FINRA reportedly found that Pearl did not understand that losses in Non-Traditional ETFs are compounded because of how the valuations reset each day.
In July 2015, Pearl became registered with David A. Noyes & Company, which is now known as Sanctuary Securities, Inc. in Indianapolis, Indiana. On April 1, 2019, David A. Noyes reportedly filed a Form U5 terminating Pearl’s registration. According to Pearl’s FINRA broker report, he reportedly has a history of regulatory actions including 5 customer complaints, 2 disciplinary actions, and 2 employment separations.
Filing a Complaint against your Brokerage Firm
The White Law Group is investigating FINRA arbitration cases involving financial advisor Stuart Pearl and the liability Sanctuary Securities may have for failure to properly supervise him.
When brokers abuse client accounts and conduct transactions that violate securities laws, such as making unsuitable investments recommendations, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
If you suffered losses investing with Stuart Pearl (Stu Pearl) and Sanctuary Securities, the securities attorneys at The White Law Group may be able to help you. Please call 888-637-5510 for a free consultation, or visit us on the web at www.whitesecuritieslaw.com.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois.