FINRA Suspends Phil Donahue for Alleged Unsuitable Recommendation
Phil Donahue (CRD #: 1206346), a broker registered with PFS Investments, was recently suspended by FINRA, according to his BrokerCheck record, accessed on October 22, 2022. Investors may have also engaged his services through Primerica Advisors. Read on if you want to know more about his conduct as a broker.
On August 10, 2022, Phil Donahue consented to the entry of findings that he allegedly recommended that two clients invest an unsuitably high percentage of their account into a single energy-sector security.
According to a Letter of Acceptance, Waiver & Consent (AWC), Customers A and B allegedly opened retirement accounts at PFS Investments. They were allegedly married, retired, and in their sixties.
Based on the information the clients provided at account opening, PFS Investments allegedly classified them as having an investment objective of “moderate growth,” a designation that under the firm’s guidelines determined that the clients should not invest more than 17% of their portfolio in a single market sector.
In January 2016, Customer B allegedly updated her account profile to reflect an investment objective of “conservative growth.” Under the firm’s guidelines, this allegedly would have limited her to no more than 13% of her portfolio in a sector fund.
However, the AWC alleges that Phil Donahue recommended that Customers A and B invest 90% of their investments at the firm into a single, non-diversified mutual fund in the first quarter of 2016. This fund allegedly invested “substantially all” of its assets in the energy sector and subjected the clients to a significant risk of loss. The mutual fund allegedly decreased in value by more than 50% by the first quarter of 2020.
After allegedly transferring their accounts to another firm, Customers A and B allegedly sold their investments in the fund in March 2020 and realized a substantial loss.
The AWC alleges that Phil Donahue violated FINRA Rules 2111 and 2010.
FINRA Rule 2111
FINRA Rule 2111 requires that brokers tailor their investment recommendations to their client’s profile. An investor’s profile describes their age, tax status, financial goals, and other information.
Recommendations of investment strategies must also be suitable for the client. Overconcentration is an example of a strategy that may be unsuitable for some investors due to the degree of risk involved.
Investors who rely on brokers for recommendations may be able to recoup their losses by pursuing FINRA arbitration.
FINRA Rule 2010
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
Phil Donahue consented to the following sanctions:
- $2,500 fine
- 30-calendar day suspension
- Requirement to attend and complete 10 hours of continuing education regarding FINRA Rule 2111 by a provider accepted by FINRA within 90 days of the acceptance of the AWC
His suspension ran from September 6 to October 5, 2022.
You can read the full AWC here.
Phil Donahue 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 6 – Investment Company Products/Variable Contracts Representative Examination
- Series 26 – Investment Company Products/Variable Contracts Principal Examination
Phil Donahue is a registered broker in Florida and Kentucky and is also a registered investment adviser in Florida.
Kurta Law Can Help
If you worked with Phil Donahue and you have concerns about your investments, please contact us today at 877-600-0098 or firstname.lastname@example.org 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.