Securities Fraud Lawyers Blog
Christopher F. Harrington Jr., a financial advisor based in New York, finds himself in the spotlight as the Financial Industry Regulatory Authority (FINRA) issues an Acceptance, Waiver, and Consent (AWC) order. The order comes after a series of troubling allegations involving Harrington’s financial advice and its impact on a vulnerable investor.
The Allegations
The heart of the matter revolves around allegations that Harrington recommended transactions within a customer’s account that not only served to inflate his own compensation but also inflicted undue financial burdens on the customer. The allegations suggest that these transactions were made without a reasonable basis to believe they were suitable for the customer’s financial situation and investment objectives.
The Vulnerable Investor
The customer at the center of this case was a 48-year-old individual who, following a life-altering disabling accident, entrusted Harrington with his investment assets. These assets were not just a means of growing wealth but a lifeline for financial security, given the customer’s inability to work due to the accident.
Inflated Compensation and Unnecessary Fees
However, rather than acting in the customer’s best interests, it is alleged that Harrington recommended actions that caused the customer to pay unnecessary commissions and fees, all to Harrington’s benefit. The transactions in question include the purchase of approximately $1.4 million in market-linked investments (MLIs), for which Harrington received fees. Shortly thereafter, Harrington moved these MLIs to another account, triggering yet another round of fees for both Harrington and the customer.
Questionable Investment Decisions
Furthermore, Harrington recommended the sale of approximately $550,000 worth of MLIs and directed the proceeds to purchase other securities in a manner that incurred approximately $7,550 in total commissions. Harrington also advised the customer to liquidate over $1.1 million and invest over $1 million in different exchange-traded funds (ETFs), generating approximately $25,000 in total commissions for himself. It is alleged that Harrington could have recommended alternative approaches that would have avoided these unnecessary and unwarranted fees and commissions.
Actions to Increase Fees
A concerning aspect of the allegations is that the timing and manner of these transactions appear to have been designed solely to increase Harrington’s fees, with little regard for the customer’s financial well-being.
Short-Term Trading and Unsuitable Recommendations
The AWC also highlights Harrington’s involvement in short-term trading, even in securities typically intended for long-term holding. For example, he recommended the purchase of Unit Investment Trusts (UITs) worth approximately $1 million in the customer’s account, only to sell each one shortly afterward. Harrington also recommended the purchase of MLIs in the customer’s account for $9,858,225, with a majority of these being sold for $6,582,043 shortly thereafter.
Frequent and Unwarranted Fees
Additionally, Harrington engaged in frequent and unsuitable transactions in master limited partnerships (MLPs), which resulted in additional and unwarranted fees. Although Harrington initially recommended that the customer purchase MLPs with the intention of benefiting from holding them long-term, it is alleged that he sold the MLPs shortly after their purchase, thereby contradicting his initial recommendation.
Conclusion
This case serves as a stark reminder of the importance of trust and accountability in the financial industry. Financial advisors are entrusted with the responsibility of acting in their clients’ best interests and providing suitable recommendations. Harrington’s alleged actions, as outlined in the FINRA AWC, appear to have fallen short of these ethical and legal obligations, leading to substantial harm to the customer involved.
Protecting Your Investments
Investors are encouraged to exercise due diligence when selecting a financial advisor and to monitor their accounts for any signs of suspicious or unsuitable activity. If you have concerns about your investments or financial advisor, it is advisable to seek professional advice and consider filing a complaint with FINRA to protect your interests.
If you have concerns about your investments, have experienced unauthorized transactions, or have been subject to financial misconduct, it’s essential to seek legal counsel. Protecting your financial interests should always be a top priority.
At Savage Villoch Law, PLLC, we specialize in representing investors who have suffered losses due to financial misconduct and can help you explore your legal options. Contact us today to schedule a free consultation and learn more about how we can assist you in seeking justice and recovering your investments. Please contact us now at (813) 251-4890 or email Bert Savage or Alfred Villoch directly at bert@savagelaw.us or alfred@savagelaw.us.
*Disclaimer: The information provided in this article is for informational purposes only and should not be construed as legal or investment advice. If you have concerns about your investments or financial advisor, it is advisable to consult with a qualified professional.*