Florida Registered Representative Consents to FINRA Sanctions to Resolve Allegations of Making Hundreds of Recommendations for Series-to-Series Unit Investment Trade RolloversWednesday, May 6, 2020
On April 20, 2020, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement approved a Letter of Acceptance, Waiver and Consent (AWC) submitted by general securities representative and general securities sales supervisor Brian Engstrom to resolve allegations of engaging in unsuitable short-term trading in customer accounts.
Engstrom’s FINRA BrokerCheck report reveals that he was associated with two FINRA member firms within the last ten years. Engstrom was associated with Oppenheimer & Co. Inc. in Tampa, Florida from January 2002 until October 2016 when he was permitted to resign in relation to trading activity in a customer’s account. Engstrom was associated with Stifel, Nicolaus & Company, Incorporated in Pensacola, Florida from October 2016 to April 2020. He is not currently associated with a FINRA member firm.
FINRA Department of Enforcement alleges in the AWC that between July 1, 2011 and December 31, 2015, Engstrom engaged in short-term Unit Investment Trusts (UITs) trading in customer accounts. UITs are a fixed portfolio of securities offered in a one-time public offering that terminate on a specified maturity date—usually 15 to 24 months after the purchase date. At the maturity date, the securities are sold and the proceeds are paid to the investor. However, UITs come with sales charges upon the initial purchase and selling them before maturity will cause a customer to incur greater sales charges than if they were held until maturity.
Engstrom allegedly recommended over 500 “series-to-series rollovers,” meaning that he recommended his customers’ sell their UITs before maturity only to purchase a subsequent series of the same UIT. This caused the customers to incur excessive sales charges, which were also unnecessary since the UITs had the same or similar investment objectives. FINRA asserts that this trading activity was unsuitable based on the frequency and cost of the transactions.
Without admitting or denying the allegations made against him, and to resolve alleged violations of NASD Rule 2310 and FINRA Rules 2111 and 2010, Brian Engstrom consented to a $5,000 fine and a three-month suspension from associating with any FINRA member firm in any capacity.
If your broker’s bad advice cost you money, give us a call at 1-877-410-8172. We may be able to help you recover your losses.