The Financial Industry Regulatory Authority (FINRA), last week, barred David Joseph Escarcega for allegedly making 12 unsuitable recommendations regarding debt instruments known as debentures linked to the secondary market for life insurance policies. He also allegedly made misleading statements to seven customers. FINRA also fined him $52,270, which was the amount he made in commissions on the sales. He sold debentures issued by CWG Holdings Inc. between March 2012 and January 2013. CWG buys life insurance policies. Most of them sold were put into individual retirement accounts (IRAs). Debentures tend to be high-risk securities which are not suitable for everyone, especially senior clients. A broker must take into account a client’s net worth, age and investment objectives when recommending or selling a security. If he does not, his firm can be liable for investment losses. Escarcega was registered with MML Investors, Pruco Securities, Mony Securities, Lincoln Financial, Chase Investment Services and Center Street Securities in Phoenix, Arizona since March 2010. He has two customer disputes against him.
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