On 10/04/2021, a client filed a dispute with allegations of “Suitability, Excessive Trading, Unauthorized Trading, Breach of Fiduciary Duty.” The client’s requested damages total $103,056.69. Nicolassy denies the allegations. This dispute is currently pending.
FINRA initiated an investigation into this client dispute. Its findings concluded that from August 2018 through July 2019, Nicolassy excessively and unsuitably traded in four customer accounts, one of whom was an 83-year-old retired real estate broker.
Between 5/29/2019 and 5/16/2019, Nicolassy also exercised discretionary authority to effect at least 18 trades in four customer accounts without getting prior written authorization from them. This activity occurred during his employment at Woodstock Financial Group. The elderly customer paid $71,409.09 in commissions and $10,410 in trade costs and margin interest, experiencing losses of more than $125,000.
Without admitting or denying the findings, Nicolassy signed the letter of Acceptance, Waiver & Consent (AWC) on 3/17/2022. He was ordered to pay restitution to the client of $32,134.09, and suspended for a total of 4 months, from 4/18/2022 through 8/17/2022. FINRA declined to impose a monetary sanction on Nicolassy in this case.
Nicolassy also has two disclosures that are tax liens. The first is dated 8/22/2019, in the amount of $20,819. The second tax lien is dated 11/8/2018 and is for $5,946. No additional information is available.
Finra Churning Rule
FINRA Rule 2111 requires, in pertinent part, that member firms or their associated persons “have a reasonable basis to believe that a recommended securities transaction or investment strategy involving a security or securities is suitable for the customer, based on information obtained through the reasonable diligence of the firm or associated person to ascertain the customer’s investment profile.” The rule imposes a “quantitative suitability” obligation that requires a member or associated person who has actual or de facto control over trading in a customer account to have a reasonable basis for believing that a series of recommended securities transactions are not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile.
Financial Exploitation Of Elderly
This is just one of the ways elderly people can be exploited by individuals they trust. In this case, a customer’s financial advisor engaged in churning to earn more commissions for himself. The excessive trading would do nothing for his client, who obviously understood. But not all elderly investors do, leading to financial exploitation.
The National Council on Aging reports that elder financial abuse costs its victims as much as $36.5 billion every year. While physical abuse and neglect is usually fairly obvious, financial abuse can be harder to find. It’s frequently committed by family members, caregivers, and other trusted individuals, sometimes under coercion.
Cognitive impairments such as dementia, Alzheimer’s, and other conditions make it easy for someone to take advantage of an elderly investor. But even without those impairments, many find themselves taken advantage of by people they believed they could trust. This includes stockbrokers, attorneys, financial representatives, investment advisers, and bankers, to name a few. While this client recognized the churning activity, many others may not be as savvy.
Some states allow an elder or a family member to pursue civil actions against a perpetrator. For instance, Florida Statute section 415.1111 allows elders who have experienced financial exploitation to recover civil damages against the person or persons who harmed them. This includes financial representatives such as stockbrokers and investment advisors.
Recovering financial damages in a court case and separate from a FINRA arbitration hearing. Silver Law Group understands elder financial abuse and is ready if you or a loved one need help.
Florida elders can also file felony criminal charges that can lead to high fines and jail time for a perpetrator.
Forbes offers more information on financial exploration of the elderly, and ways to combat and prevent yourself or someone you know from becoming a victim.
Did You Invest With Eric Nicolassy?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.