The Financial Industry Regulatory Authority (“FINRA”) has permanently barred McNally Financial Services Corporation representative Dennis Masaaki Nakamura from the securities industry based on his refusal to give testimony during FINRA’s investigation into allegations that he made unsuitable investment recommendations to his customers.
The ban follows a customer’s allegation in November 2019 that Nakamura caused financial damages of $443,000 in the customer’s account based on losses in unsuitable investments Nakamura recommended. In July 2018, Nakamura settled another customer’s $492,000 claim based on unauthorized trading, unsuitable trade recommendations, failure to supervise, excessive trading, and elder abuse.
Nakamura’s FINRA BrokerCheck report shows that he was hired by McNally Financial Services Corporation in 2010 and worked in its Moraga, California branch. When hired by McNally Financial, Nakamura already had four customer disputes on his record, including allegations of over-charged commissions, elder abuse, fraud, misrepresentations, and unsuitable trading. Nakamura picked up two additional customer disputes while employed by McNally Financial before FINRA barred him from the industry.
Stockbrokers have a duty to know the important facts pertaining to their customers’ investment objectives, risk tolerance, experience, investment time horizon, net worth, and other pertinent financial information, and have a reasonable basis to believe that the investments and strategies they recommend are suitable for the customer.
Brokers likewise cannot make unauthorized trades in customers’ accounts: they either must receive discretionary authority from their customers to make trades on the customers’ behalf or they must discuss each trade with their customers and give a balanced presentation of the positives and negatives of the investments and receive the customers’ approval of the trade.