FINRA fined and suspended former Cetera Investment Services broker Richard Charles "Chuck" Foster for unsuitably recommending that a customer liquidate an IRA, and using the proceeds to trade in an outside brokerage account utilizing a risky options trading strategy involving exchange-traded funds (ETFs). Regulators also cited Foster for commingling the customer's funds with his own funds and for failing to inform Cetera of this activity.
According to the findings, Foster (CRD #4557045) began by recommending the customer roll over his 401(k) from a former employer into an IRA account at Cetera Investment Services, subsequently investing the entire account in mutual funds.
The report states that after gaining authorization from Cetera, Foster began operating the CF Income Fund; FINRA found that in order to gain firm approval, however, Foster represented that the CF Income Fund would be a personal trading vehicle and would not involve any firm customers.
Instead, Foster purportedly introduced his customer to the ETFs he dealt with in the CF Income Fund, ultimately liquidating the entire Cetera IRA, and investing nearly 95% of the proceeds in his CF Income Fund account.
The CF Income Fund subsequently lost "significant value" due to trading losses and commission costs associated with Foster's high-volume ETF options trading strategy, additionally causing the customer to incur an $81,000 tax penalty based on the early liquidation of the Cetera IRA.
FINRA concluded that Foster's recommendation to his customer to invest in the CF Income Fund was unsuitable, resulted in a high concentration of assets in risky securities, and that Foster had commingled his own funds with the customer's in the Fund.
A pending customer dispute in Foster's file alleges negligence, breach of fiduciary duty, and securities fraud.
If you have invested with ex-Cetera Investment Services broker Richard Charles Foster or with any broker or financial adviser who has unsuitably recommended that you invest a substantial portion of your portfolio in ETFs or other complex products, resulting in an overconcentration of your position in risky securities, or who has unsuitably recommended a premature liquidation of your retirement accounts, resulting in significant tax penalties or excessive commissions and fees that have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.