**Update: 3/22/2021** Ms. Cowden has been the subject of two additional customer disputes since November 2020. First, in November 2020, a customer filed a securities arbitration complaint alleging $400,000 in damages concerning a real estate security recommendation. The causes of action included breach of fiduciary duty, unauthorized trading, and elder abuse. Second, in January 2021, a customer filed a written complaint with NPB Financial Group, LLC alleging $350,000 in damages related to an unsuitable investment recommendation. The customer has not yet filed a securities arbitration complaint. If you or a loved one were a customer of Diane Cowden, contact securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of the investment or retirement accounts.
Original Post:
Financial Advisor Cynthia Diane Cowden (CRD# 2054676) BARRED by FINRA for Recommending High- Risk Investments to Three Senior Customers – Lake Isabella, CA
FINRA has permanently barred financial advisor Cynthia Diane Cowden from the securities industry. Cynthia Cowden was a stockbroker at NPB Financial Group, LLC, in Lake Isabella, CA, from January 2013 until August 2020.
FINRA alleged that between August 2016 and December 2017, Cynthia Cowden recommended unsuitable high-risk, speculative investments to an elderly couple and another senior customer. During FINRA’s investigation, Cowden also provided false testimony to FINRA regarding the customers’ assets and income.
The specific allegations related to the elderly couple include the following:
- Cowden recommended that the retired couple invest $231,200 into NorthStar Real Estate Income Trust (“NorthStar”), an illiquid, high risk, non-traded REIT.
- The seniors were California residents with little investment experience.
- They had a combined net worth of approximately $1 million, a combined liquid net worth of $300,000, and a combined annual income of $23,000.
- They had a declared risk tolerance of “moderate.”
- Their investment objective included a stable, balanced portfolio as well as income and liquidity because they were relying on the investment to supplement their income.
- The investments comprised over 20% of the couple’s net worth, more than double NorthStar’s concentration limit of 10% of net worth for California investors.
- The NorthStar investments were not suitable, given the couple’s investment objective, circumstances, and financial needs.
- NorthStar’s illiquidity and high-risk level also far exceeded the couple’s moderate risk tolerance.
Similarly, the specific allegations related to another senior investor include the following:
- Cowden recommended that a senior investor purchase $250,000 of Priority Income Fund, Inc.
- Priority Income Fund, Inc. is a speculative, high-risk, illiquid, and closed-ended mutual fund.
- The senior investor was a California resident with little investment experience.
- The investor had a net worth of approximately $400,000, a liquid net worth of $300,000, an annual income of $60,000, and a low to moderate risk tolerance.
- The customer’s investment objective was “slow growth,” “reasonable rate of return,” and “liquidity.”
- The Priority investment was not suitable, given the customer’s investment objective, circumstances, and financial needs.
- The $250,000 investment in Priority Income Fund, Inc. comprised an unsuitable concentration of over 50% of the customer’s net worth.
- Priority’s illiquidity and high-risk level also far exceeded the customer’s low to moderate risk tolerance.
FINRA Rule 2111 requires that a stockbroker have a reasonable basis belief that the recommendation is suitable for the investor based on their investment profile, which includes: a customer’s age, financial situation and needs, investment objectives, investment experience, investment time horizon, liquidity needs, and risk tolerance.
FINRA also takes its role to protect senior investors seriously. In fact, just this week, FINRA amended its internal rules and will now expressly contemplate a customer’s age when it is considering sanctions for brokers who break FINRA’s rules.
Ms. Cowden appears to be a repeat offender violating FINRA’s suitability rules, particularly related to senior investors. According to her BrokerCheck Report, she has been the subject of three other customer complaints:
- Earlier in 2020, a senior investor alleged that a real estate security was not suitable. The customer also alleged elder abuse.
- In 2012, a customer alleged that a tenancy in common investment was unsuitable and misrepresented.
- In 2006, an elderly investor alleged elder abuse related to a mutual fund investment.
NPB Financial Group, LLC – A Duty to Supervise
Ms. Cowden’s prior employer, NPB Financial Group, LLC, settled charges with the Securities and Exchange Commission (SEC) on August 20, 2020. The SEC charges arose out of NPB Financial Group, LLC’s mutual fund share class selection practices, and receipt of 12b-1 fees. To settle the charges, NPB Financial Group, LLC consented to a cease-and-desist order, a censure, disgorgement of $532,519, pre-judgment interest of $92,668, and a civil penalty of $425,000. NPB Financial Group, LLC, is registered as both an investment adviser and broker-dealer and is subject to both SEC and FINRA jurisdiction.
Brokerage firms like NPB Financial Group, LLC, must properly supervise financial advisors and customer accounts. Proper supervision of senior investors’ accounts is especially critical. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity, such as elder abuse and suitable investment recommendations, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to sufficiently supervise its financial advisors or the investment account activity , it may be liable for investment losses sustained by customers.
If you have lost money with financial advisor Cynthia Diane Cowden or NPB Financial Group, LLC, contact securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.