Did Florentino Chapa Recommend Unsuitable Investments?
Florentino Chapa (CRD #:4763953), a broker registered with Sanctuary Securities is involved in his second investor dispute, according to his BrokerCheck record, accessed on November 22, 2021. Florentino Chapa is also an investment advisor registered with Sanctuary Advisors.
Investor Allegations
On October 19, 2021, an investor filed a dispute alleging that Florentino Chapa recommended multiple unsuitable investments. The dispute is still pending.
The disclosure does not specify the nature of the unsuitable investment, but brokers are required to have a reasonable basis for recommending an investment according to FINRA Rule 2111.
What is a Suitable Investment?
FINRA defines suitable investments as securities that fit an investor’s profile. An investor’s profile includes information about their risk tolerance, financial goals, and age.
FINRA Rule 2111 identifies the three prongs of a suitability determination as 1) reasonable-basis suitability, 2) customer-specific suitability, and 3) quantitative suitability.
- Reasonable-basis Suitability: Brokers are required to use reasonable diligence before making a recommendation. This means they have an obligation to understand an investment strategy and its potential risks or rewards.
- Customer-specific Suitability: Before recommending a particular security or investment strategy involving a specific client, brokers are required to have reasonable grounds for believing it will be suitable based on that client’s personal profile. The profile includes information on the investor’s financial goals, investing experience, and risk tolerance.
- Quantitative Suitability: Brokers with control over a customer’s account must have a reasonable basis to believe that the series of transactions they recommend are not excessive before executing them. Excessive transactions run the risk of incurring too many fees and negating any returns.
Investors who rely on their brokers for recommendations may be able to recover their losses through FINRA arbitration.
Denied Dispute
On May 23, 2015, Florentino Chapa was involved in another investor dispute. According to the allegations, on December 16, 2013, Florentino Chapa purchased an investment without authorization from the client. The damage amount requested was $350,000.
FINRA Rule 3260 states that brokers should always have their investor’s authorization before they execute a securities transaction unless they’re trading in a securities account that has been authorized for discretionary trading.
The firm denied the dispute, but investors should know that firms can deny disputes without external review. Investors should also know that they can still pursue FINRA arbitration and recover their losses following a denial.
Background Information
Florentino Chapa has passed the following exams:
- Series 66 – Uniform Combined State Law Examination
- Series 63 – Uniform Securities Agent State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
Florentino Chapa is a registered broker in three states. He is also a registered investment adviser in Texas.
Besides Sanctuary Securities and Sanctuary Advisors, Florentino Chapa has worked with the following firms:
- Wells Fargo Clearing Services (CRD#:19616)
- Wells Fargo Investments (CRD#:10582)
- Chase Investment Services (CRD#:25574) –
Kurta Law Can Help
If you have worked with Florentino Chapa and have concerns about your investments, don’t hesitate to contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.
For nearly 20 years, Kurta Law has advocated for investors to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.