Securities Arbitration Lawyer Blog
FINRA has suspended financial advisor Michael Anthony Tavel (CRD #4862463) from the securities industry for 18 months and fined him $20,000. Michael Tavel was a stockbroker at LPL Financial LLC, in Indianapolis, Indiana, from September 2004 until April 2019. He has also been affiliated with Charter Advisory Corporation and Tavel Insurance & Financial Services, LLC.
If you have lost money with Michael Tavel, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
Michael Tavel and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on December 17, 2020, over allegations related to Mr. Tavel recommending private securities transactions to three investors. One of the transactions involved a senior customer. Mr. Tavel did not have a reasonable basis to believe that the recommendation that the senior invest in the private security was suitable. Mr. Tavel also provided misleading materials to the customers and, after the customer orally complained, improperly attempted to settle the complaint away from the firm.
FINRA’s Selling Away Allegations:
When a financial advisor solicits a customer to participate in a securities transaction that is not offered or approved by the advisor’s employing brokerage firm, it is often referred to as selling away.
This blog has previously written about other recent selling away allegations: Future Income Payments, LLC. This blog has also previously written about selling away allegations made against another LPL Financial LLC financial advisor, Ms. Lonna R. Dehn Ristvedt.
FINRA alleged that from 2017 through 2019, while registered with LPL Financial LLC, Mr. Tavel participated in three private securities transactions away from the firm totaling $265,000. Specifically, FINRA alleged:
- In August 2017, Mr. Tavel agreed to act as a placement agent for a private issuer purportedly in the business of making commercial loans.
- A few months later, Mr. Tavel provided an 82-year-old senior customer the private issuer’s marketing material and explained a potential investment with the private issuer to the customer.
- In November 2017, the 82-year-old investor purchased a $25,000 note for which Mr. Tavel received a $562.50 commission.
- In 2018, the issuer and its chairman were charged by the SEC with fraud, and the senior investor lost his entire investment.
- In June 2018, Mr. Tavel agreed to act as placement agent for an oil-extraction company.
- Based on his recommendation and explanation of the venture, two of Mr. Tavel’s other LPL customers invested in private placements connected to the oil-extraction company. One invested $200,000 on November 2, 2018, and the other $40,000 on February 7, 2019.
- Mr. Tavel received a total of $19,700 in commissions for the transactions.
- Mr. Tavel did not provide written disclosure to LPL Financial LLC in connection with any of these investments.
- In August 2018, Mr. Tavel falsely attested to LPL Financial LLC that he had not solicited any unapproved private placements.
FINRA’s Unsuitable Recommendation Allegations:
Financial advisors must have a reasonable basis to believe that a recommended transaction is suitable for a customer, based on information obtained through the advisor’s reasonable diligence. FINRA alleged that Mr. Tavel did no meaningful due diligence related to the private security he recommended to his 82-year-old customer and thus did not have a reasonable basis for making the transaction. Specifically, FINRA alleged:
- In late 2017, Mr. Tavel recommended the aforementioned private securities transactions to his senior customer.
- Other than reviewing the private issuer’s marketing materials, Mr. Tavel did no meaningful due diligence before recommending the potential investment.
- Accordingly, Mr. Tavel had no reasonable basis for recommending the investment to anyone.
- Additionally, the recommendation was not suitable for the 82-year-old senior investor, who had a conservative risk tolerance and an investment objective of growth with income.
- The purported lender— whose business model ostensibly involved making short-term loans at high-interest rates to entities that could not secure traditional financing—was not suitable for the senior investor given his investment profile.
FINRA’s Misrepresentations Allegations
A misrepresentation or omission of a material fact made to a customer is not in a customer’s best interest and a violation of FINRA Rule 2010. FINRA alleged that Mr. Tavel misrepresented his status to his 82-year-old customer. Specifically, FINRA alleged:
- Mr. Tavel periodically received marketing materials from the private issuer, including sample customer statements addressed to “Dear XXX” that showed a hypothetical investor’s monthly returns.
- Mr. Tavel also received a document generally describing the business model for the private issuer and its performance to date.
- In connection with recommending that the senior customer invest with the private issuer, Mr. Tavel provided the customer with the marketing materials and added misleading annotations.
- Even though he was not and had never been an investor, Mr. Tavel added a post-it to the sample customer statement stating, “this is my statement. I receive this monthly” (emphasis in original).
- Similarly, on the other marketing document, Mr. Tavel wrote, “we are referred to as lenders throughout,” next to a description of the returns for investors.
- Both statements inaccurately suggested to the senior customer that Mr. Tavel personally invested in the private issuer.
In addition to these sales practice violations, FINRA also alleged that Mr. Tavel inappropriately attempted to settle with the senior investor away from the firm. Specifically, FINRA alleged that Mr. Tavel offered to reimburse the senior investor of his $25,000 loss in exchange for withdrawing a complaint that was made.
Brokerage firms like LPL Financial LLC must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity, such as private securities transactions, 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 Michael Anthony Tavel or LPL Financial LLC, contact New York securities arbitration lawyer 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 review of your account.
Iorio Altamirano LLP is a boutique law firm located in the heart of New York City. Iorio Altamirano LLP represents investors nationwide who have suffered investment losses due to securities fraud.