Securities Arbitration Lawyer Blog
The Financial Industry Regulatory Authority (“FINRA”) has suspended financial advisor Angel Wynette Bardeche (CRD# 4698117) from the securities industry for nine months and fined her $10,000. Ms. Bardeche was also ordered to return $5,000 worth of commissions to customers. Angel Bardeche was registered with Ameriprise Financial Services, LLC in Cincinnati, Ohio, from August 2012 until May 2019. At that time, Ameriprise terminated her employment.
Ms. Bardeche has also received at least three customer complaints alleging that she did not disclose the surrender charges or annual fees associated with variable annuities purchases between 2013 and 2015.
If you have suffered financial losses investing with Angel Bardeche or suspect that Ms. Bardeche did not have your best interest in mind when recommending investments, mutual funds, mutual fund switches, annuities, or annuity switches, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of your account or annuity contract.
Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as Ameriprise Financial Services.
FINRA Letter of Acceptance, Waiver, and Consent No. 2019062628701
Angel Bardeche and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on January 6, 2021, over her conduct from January 2017 to March 2019.
Unsuitable Mutual Fund Switches
According to FINRA, Ms. Bardeche recommended that her customers engage in a pattern of switching of Class A mutual fund shares, including short-term liquidations. Specifically, FINRA alleged:
- From January 2017 through March 2019, while employed by Ameriprise Financial, Ms. Bardeche frequently recommended that her clients enter into unsuitable switching transactions that often included short-term liquidations.
- On 112 occasions, she recommended that 32 customers purchase Class A mutual fund shares, later sell those funds, and then use the proceeds to buy more Class A mutual fund shares.
- In many of those instances, she recommended that the customer purchase Class A shares and later sell them after only a short period and use the proceeds to buy more Class A shares.
- In 49 instances, the customer sold the first Class A mutual fund within 18 months of purchasing it, and in 25 instances, the customer sold the first Class A mutual fund within a year of its purchase.
- The customers paid a total of about $450,000 in sales charges on the 112 switches.
When a customer purchases Class A mutual fund shares, the customer pays upfront sale charges. To offset the initial upfront fee, a client should generally hold the mutual fund long-term to benefit from the security’s appreciation. If a client sells the Class A mutual fund soon after purchasing it, the customer may incur an unnecessary and excessive expense. Accordingly, Class A mutual fund shares are generally suitable only as a long-term investment. Additionally, if a customer purchases a Class A mutual fund, sells it, and then purchases Class A shares with a new sales charge (known as a “mutual fund switch”), that client incurs an additional fee when purchasing the second Class A mutual fund. These types of fees may be excessive and thus render the switch unsuitable.
Unauthorized Trading
In addition, FINRA alleged that Ms. Bardeche exercised discretion without prior written authorization when executing 109 transactions in eight customer accounts. Specifically, FINRA alleged:
- From January 2017 through March 2019, Ms. Bardeche exercised discretion without written authorization when executing approximately 109 transactions in eight non-discretionary customer accounts, without prior written authorization from the customers and without prior written approval by her firm.
- Bardeche did not have his firms’ approval to exercise discretion in these accounts.
Under FINRA rules, to exercise discretionary power, a broker must have prior written authorization from a customer before executing a trade. FINRA rules require that a customer sign a discretionary disclosure, which allows the customer to place limits on the discretion being granted to the broker. Additionally, the firm must approve the account to be discretionary. A broker can then use his discretion and place trades without obtaining the customer’s authorization first. However, without such written authorization by the customer and firm approval, a broker who receives verbal authorization from a client to execute a trade and makes the transaction violates FINRA rules. Oral permission to execute a trade is not sufficient.
In non-discretionary accounts, customers retain discretion, and brokers must always obtain their customer’s permission before placing a trade. You can read more about unauthorized trading in the context of both discretionary and non-discretionary accounts here: Unauthorized Trading.
Ameriprise Financial Services, LLC: A Duty to Supervise
Financial institutions, like Ameriprise Financial, must properly supervise financial advisors and customer accounts. Brokerage firms are required to establish and maintain a reasonably designed system to oversee account activity, such as mutual fund switches and the improper use of discretion, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
How to Recover Losses or Free Obtain a Free Consultation
If you have suffered financial losses investing with Angel Bardeche or suspect that Ms. Bardeche did not have your best interest in mind when recommending investments, mutual funds, mutual fund switches, annuities, or annuity switches, contact New York securities arbitration lawyer August Iorio of Iorio Altamirano LLP 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. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.