The law firm of Oakes & Fosher is presently investigating the alleged misconduct of former securities broker Richard Yada. According to his publicly available FINRA BrokerCheck report, Richard Yada has been the subject of a customer dispute and a FINRA sanction.

Richard Yada was an Arkansas based securities broker. He worked in the securities industry for thirty-four years. During his career, he was registered with four different securities firms. He is no longer working as registered securities broker.

His Registrations

  • Structured Shelters Securities (1982-1986)
  • Merrill Lynch (1983-2002)
  • Citigroup Global Markets (2002-2009)
  • LPL Financial (2009-2017)

The Allegations

  • In August 2017, a customer alleged that Richard Yada engaged in unauthorized and excessive trading to generate commissions–also known as churning. This case is currently pending. The customer is seeking $170,000 in damages.
  • In September 2018, Richard Yada was officially sanctioned by FINRA. The findings in this matter state that he exercised discretion in customer accounts without prior written authorization from the customers or having the accounts accepted as discretionary by his member firm. For the allegations he was fined $5,000 and suspended from acting as a registered securities broker for a period of two months. He had already been terminated from LPL Financial in February 2017, after the allegations were first brought forward.

Churning

Investors need to make sure that their broker is investing their account suitably both in the securities they recommend, and the frequency in which they execute trades. When a broker trades an investor’s account excessively, it can often be financially detrimental to the investor. This is due to the unnecessary fees and trading losses that occur as a result. The main reason behind a broker’s excessive trading is usually to generate more commissions for themself. When a broker excessively trades an investor’s account with the intent to generate more commissions, it is referred to as churning. This is a fraudulent trading practice that is, unfortunately, relatively common.

What is Discretion

Securities brokers are required to obtain their customers’ authorization before executing trades on their behalf. Just because an investor has hired a securities broker to recommend suitable securities, does not mean that they have forfeited the right to ultimately decide what they want to be invested in. However, there is a trading practice known as discretion that allows brokers to execute trades in an investor’s account without having to obtain authorization for every trade. However, before a broker can begin discretionary trading, they must first receive express written authorization from the account holder, and have their member firm deem the account in question as suitable for discretionary trading.

Discretion can be a very slippery slope due to the excess of power that it gives to brokers. It allows brokers the ability to purchase unsuitable securities in their customers accounts. It also allows them to trade their customers’ accounts excessively, possibly churn them. Both of which can be detrimental to investors.

Oakes & Fosher Can Help

Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who have lost money in this fashion may actually be entitled to damages.

Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing with Richard Yada, please contact Oakes & Fosher for a free and private consultation.