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Lynn Faust Subject of FINRA Fine and Suspension Following Unsuitability Allegations

Apr 12, 2022 FINRA Fine

Lynn Faust (CRD #: 729012), a broker and investment advisor registered with Stifel, Nicolaus & Company, Incorporated, is the subject of a FINRA suspension and fine, according to her BrokerCheck record, accessed on April 7, 2022.

FINRA Suspension 

According to an Acceptance, Waiver, and Consent agreement dated February 4, 2022, Lynn Faust consented to the findings that she recommended an unsuitable pattern of short-term trading of Unit Investment Trusts (UITs) in customer accounts. Lynn Faust's recommendations allegedly caused her customers to incur unnecessary excess sales charges. UITs are not suitable for short-term trading. 

Unsuitable Investment Recommendations Violate FINRA Rule 2111

FINRA Rule 2111 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. Investors who rely on their brokers for recommendations may be able to recover their losses through FINRA arbitration.

  • Investments can be unsuitable because they are high risk and likely to lose money.
  • Securities may also be unsuitable because they are illiquid, meaning that they are intended to be held for an extended time, and investors may have to pay high fees to cash out.
  • Securities can be quantitatively unsuitable, which means that brokers executed an excessive number of trades.
  • These requirements apply to the overall investment strategy as well as the investments themselves. For instance, an investment strategy might be unsuitable if the securities are over-concentrated in a particular stock or sector.

Sanctions

As part of the terms of the AWC, Lynn Faust consented to:

  • A three-month suspension 
  • A $5,000 fine

You can read a copy of the AWC here.

Misrepresentation Allegations

  1. On January 17, 2019, an investor alleged that Lynn Faust misrepresented investments sold between 2012 and 2018. The case was settled for $81,895.09.
  2. On November 16, 2018, Lynn Faust was named in a similar investor dispute alleging misrepresentation regarding market linked notes. The case is still pending一the investor is seeking $59,000.

Misrepresentation Violates FINRA Rule 2020

Misrepresentation is a common problem in the securities industry. It usually occurs when an investment broker makes false or misleading statements about a financial product in an effort to persuade their customer to invest.

The following can be considered as misrepresentation or omission:

  • Inadequate due diligence concerning security offerings
  • Failure to disclose all material risks
  • Failure to disclose all transaction costs
  • Unrealistic projections for future returns

Misrepresentations and omissions deprive investors of the information they need to assess risks associated with a particular investment. FINRA Rule 2020 prohibits brokerage firms and stockbrokers from making material misrepresentations or inducing individuals into buying investments with false statements about their potential benefits. 

Losses that can be attributed to a stockbroker's material misrepresentations of facts may result in a viable securities arbitration claim for damages.

Employment Termination Details

On October 17, 2018, Raymond James & Associates fired Lynn Faust after she allegedly recommended an unsuitable UIT trading strategy. 

Background Information

Lynn Faust 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 31 - Futures Managed Funds Examination
  • Series 7 - General Securities Representative Examination
  • Series 22 - Direct Participation Programs Representative Examination
  • Series 6 - Investment Company Products/Variable Contracts Representative Examination
  • Series 8 - General Securities Sales Supervisor Examination (Options Module & General Module)

She is a registered broker in 18 states and a registered investment advisor in Texas and South Carolina.

Besides Stifel, Nicolaus & Company, Incorporated, and Raymond James & Associates, Lynn Faust has also worked with PaineWebber Incorporated (CRD#:8174) and Waddell & Reed (CRD#:866).

Kurta Law Can Help

If you have worked with Lynn Faust 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.