FINRA Suspends Jeffrey Graves for Alleged Failure to Supervise

Jeffrey Graves (CRD #: 1398578), a broker registered with Cetera Advisor Networks, has been suspended by FINRA in a principal capacity, according to his BrokerCheck record, accessed on December 13, 2022. If you have questions about his alleged conduct as a broker, read on.

FINRA Suspension

On November 25, 2022, Jeffrey Graves consented to the entry of findings that he allegedly failed to reasonably supervise the use of margin in client accounts as General Securities Principal at FFEC Wealth Partners.

A Letter of Acceptance, Waiver & Consent (AWC) alleges that, from June 2017 through September 2019, FFEC failed to establish and enforce a supervisory system, including the creation of Written Supervisory Procedures (WSPs) designed to supervise unsuitable margin trading.

The AWC alleges that the firm’s existing WSPs required assigned supervisors and branch office managers to review client accounts and transactions on a daily basis to evaluate the suitability of account activity. Jeffrey Graves allegedly failed to conduct these reviews regarding the use of margin by two clients:

Customer A: 79-year-old retired widow whose account was intended to pay her monthly expenses during retirement. She had an investment objective of “income” and a moderate risk tolerance. For the life of her account, almost all trading recommended by Jeffrey Graves was allegedly done on margin. She allegedly wrote checks from her account to pay for her expenses, adding to her margin balance and margin interest by borrowing against the value of the margined securities in the account. Customer A’s month-end margin balance was allegedly over 50% of her account equity during the full life of the account.

Customer B: 56-year-old whose account objective was “growth” with a moderate risk tolerance. Nearly all trading recommended by Jeffrey Graves was allegedly done on margin. Her month-end margin balance allegedly ranged between 21-216% of the equity in the account and was over 50% every month following the first six months after account opening.

According to the AWC, Jeffrey Graves allegedly failed to take reasonable steps to assess the suitability of the use of margin in these accounts.

As a result of Jeffrey Graves’ recommendations, Customer A allegedly paid $58,696.05 in margin interest and commissions/fees charged on margin trades and Customer B paid allegedly $41,413.32 in margin interest and commissions/fees.

Additionally, the AWC alleges that Jeffrey Graves and FFEC failed to reasonably supervise mutual fund switches in the accounts of Customers A and C. Allegedly neither of these investors signed switch letters approving these actions and were not informed of the associated costs of switching their mutual funds. Customers A and C allegedly paid fees totaling $3,560 and $9,003.50, respectively.

The AWC concludes that Jeffrey Graves and FFEC’s alleged misconduct violated FINRA Rules 3110 and 2010.

FINRA Rule 3110

FINRA Rule 3110 requires that firms establish systems of supervision over their employees to maintain their compliance with securities regulations.

FINRA Rule 2010

FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.

Sanctions

Jeffrey Graves consented to the following sanctions:

• $5,000 fine
• 15-business day suspension from associating with FINRA members in principal capacities
• Completion of 20 hours of continuing education regarding supervisory responsibilities within 90 days of Notice of Acceptance of the AWC

His suspension will begin on December 19, 2022, and will end on January 9, 2022.

You can read a copy of AWC here.

Background Information

Jeffrey Graves has passed the following exams:

• Series 65 – Uniform Investment Adviser Law Examination
• Series 63 – Uniform Securities Agent State Law Examination
• SIE – Securities Industry Essentials Examination
• Series 3 – National Commodity Futures Examination
• Series 7 – General Securities Representative Examination
• Series 6 – Investment Company Products/Variable Contracts Representative Examination
• Series 24 – General Securities Principal Examination
• Series 8 – General Securities Sales Supervisor Examination (Options Module & General Module)

Jeffrey Graves is a registered broker and a registered investment adviser in Arizona and Texas.

He has also worked for the following firms:

• FFEC Wealth Partners (CRD#:16507)
• Banc of America Investment Services (CRD#:16361)
• Quick & Reilly (CRD#:11217)
• Banc of America Securities (CRD#:26091)
• Morgan Stanley & Company (CRD#:8209)
• Morgan Stanley (CRD#:7556)
• John Hancock Distributors (CRD#:468)

Kurta Law Can Help

If you worked with Jeffrey Graves and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want 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.