Stu Pearl Fined Over Unsuitable Trading Strategy with Non-Traditional EFTs
Stu Pearl (CRD #: 1500833), an investment adviser registered with International Assets Investment Management, is facing a FINRA fine regarding non-traditional EFTs, according to his BrokerCheck record, accessed on August 6, 2021. This is his second regulatory action and ninth disclosure.
Regulatory Actions
- FINRA Allegations Regarding Non-Traditional ETFs
On July 1, 2021, Stu Pearl entered into an AWC with FINRA in which he consented to the findings that he recommended unsuitable non-traditional exchange-traded funds (NT-ETFs). These are risky products, and Pearl allegedly did not understand them fully. For instance, he allegedly did not understand that these products need to be monitored on a daily basis. He also allegedly did not know that losses in NT-ETFs are compounded because of how the valuations reset every day.
Pearl’s investors held NT-ETFs for an average of 400 days, resulting in $80,000 in losses. As part of the terms of the AWC, Pearl agreed to a three-month suspension and a deferred fine of $5,000. You can read a copy of the AWC here.
- FINRA Allegations Regarding Margin Accounts
There is a second regulatory action on Pearl’s record.
On October 9, 2017, Pearl entered into an AWC with FINRA. In it, he consented to the findings that he affected securities transactions in a customer’s account on several occasions without authorization. The AWC further alleged that Pearl recommended an unsuitable margin account. Margin accounts can be quite risky since they trade with borrowed money. They also require that the investor deposit more money if the balance drops too low. Brokers can call investors to tell them to deposit more money in the margin account – this is called a “margin call.” His recommendation that an investor should open a margin account was allegedly unsuitable and resulted in seven different margin calls.
As part of the terms of the AWC, Pearl consented to a $7,500 fine and a 45-day suspension. You can read a copy of the AWC here.
Settled Investor Disputes
There is a settled investor dispute related to margin trading. Two investor disputes alleged that Pearl made unauthorized use of margin accounts. These disputes were collectively settled for $125,000.
Two other investor disputes alleged that Stu Pearl executed transactions without authorization. These collectively settled for $138,000.
Employment Separation
- Permitted to Resign: On March 7, 2019, Stu Pearl was permitted to resign from David A. Noyes & Company following allegations that he had not followed a heightened supervision plan. The firm further alleged that Stuart Pearl would have been terminated had he not resigned.
- Termination: On June 30, 2015, Ameriprise fired Stu Pearl following allegations that he violated company policies related to the use of discretion in non-discretionary accounts.
Stu Pearl Background Information
Pearl has passed the following exams:
- Series 65 Uniform Investment Adviser Law Examination
- Series 63 Uniform Securities Agent State Law Examination
- Securities Industry Essentials Examination
- Series 7 General Securities Representative Examination
He has worked with the following firms:
- David Noyes & Company (CRD #: 205)
- Ameriprise Financial Services (CRD #: 6363)
- Morgan Stanley Smith Barney (CRD #: 149777)
- CitiGroup Global Markets (CRD #: 7059)
- Merrill Lynch, Pierce, Fenner & Smith (CRD #: 7691)
Kurta Law Can Help
If you worked with Stu Pearl and you have concerns about your investments, contact Kurta Law today. Call 212-658-1502 or email jkurta@kurtalawfirm.com.