FINRA Accuses Broker of Losing $8 Million Investing in ETFs

The Financial Industry Regulatory Authority (“FINRA”) has filed a case against Richard William Lunn Martin (“Martin”) (CRD# 723309) for allegedly recommending clients invest in unsuitable non-traditional exchange traded funds (“non-traditional ETFs”).

Martin has been employed by G.F. Investment Services, LLC (CRD# 132939) from April 2014 to July 2015 and between July 2009 and April 2014.  Between martin’s two stints at G.F. Investment Services, he was employed by Global Strategic Investments, LLC (CRD# 117028).  At both brokerage firms, Martin was based out of Miami, Florida.

According to the complaint, Martin claimed to believe that the world economy was “on the precipice of catastrophe,” and his customers should invest in these non-traditional ETFs as a safeguard.  As a result of this belief, Martin recommended to almost all of his customers that they invest almost exclusively in and hold for long periods of time non-traditional ETFs, despite the enormous risks associated with holding these investments for more than one trading session; one day.

According to the complaint, virtually all of Martin’s customers were heavily concentrated in the non-traditional ETFs, ranging from 75 percent to 99 percent.  Additionally, the complaint alleges Martin demonstrated a lack of knowledge of how the non-traditional ETFs functioned, which made his recommendation to invest in the product unsuitable for his 44 customers.

According to the complaint, Martin would communicate to his clients and speak strongly about the about the economy, stating that it was a depression that would last many years and that it was in far worse condition than it was in 1929.  1929, of course, is when the Great Depression began.

Ultimately, Martin recommended his customers hold the non-traditional ETFs until an “apocalyptic crash” occurred in the financial markets, which never did occur, and caused his customers approximately $8 million in losses, according to the complaint.

The misconduct occurred from at least March 2011 through July 2015.  Four FINRA arbitrations have been filed proceeding the investigation, with two settling collectively for over $300,000.  In total, Martin has 19 FINRA BrokerCheck disclosures.  According to the report, many of the FINRA arbitrations related to the FINRA investigation have settled.

Martin’s actions are contrary to FINRA advisory materials.  In June 2009, FINRA advised its membership through a Regulatory Notice concerning non-traditional ETFs that the products were inherently complex and typically not suitable for retail investors who plan to hold them for more than one trading session.

While brokers have to recommend suitable investments, the customer protection onus is not entirely on the brokers.  Supervising firms owe a duty to their customers to properly supervise their brokers and set up protocols to catch issues before they turn into disasters like they did here.

If you have invested with Richard William Lunn Martin and have lost money doing so, you may be able to recover some or all of your losses.  Our lawyers are experienced in recovering investor losses due to misconduct such as that alleged in FINRA’s case against Martin.

Silver Law Group represents the interests of investors who have been the victims of investment fraud.  If you have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.