A Financial Industry Regulatory Authority (“FINRA”) hearing panel has ordered Lakeland, Florida-based Brookstone Securities, Inc. (“Brookstone”) to pay a $1 million fine and $1.6 million in restitution to investors for the firm’s fraudulent sales of collateralized mortgage obligations (CMOs) to unsophisticated, elderly and retired investors.
According to the panel, from July 2005 to July 2007, Brookstone’s CEO, Anthony Turbeville (“Turbeville”), and one of the firm’s brokers, Christopher Kline (“Kline”), fraudulently misrepresented the risks associated with CMO investments to elderly and unsophisticated investors, for whom CMOs were unsuitable. As part of its decision, the panel barred Turbeville and Kline from the securities industry.
According to the decision, Turbeville and Kline induced retired investors to invest in unsuitable CMOs by exploiting the elderly customers’ fears of losing their assets to nursing homes, or of becoming destitute in their golden years. The panel found that Turbeville and Kline misrepresented that CMOs were bonds, guaranteed by the government, which preserved capital, and promised returns between 10 and 15 percent. According to the findings, Brookstone received nearly $500,000 in commissions on the CMO transactions, while the same customers suffered losses in the CMOs of $1.6 million.
The ruling by the hearing panel resolves charges brought by FINRA in 2009. If the decision is not appealed, or called for review by the National Adjudicatory Council, it will become final in 45 days.
The Florida securities lawyers at McCabe Rabin, P.A. represent investors nationwide in FINRA arbitration matters. Investors nationwide who have incurred recoverable investment losses due to specific failures by stockbrokers and brokerage firms, and who may have a FINRA arbitration claim, may contact the Florida securities lawyers at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or by e-mail to firstname.lastname@example.org.