News & Articles - Law Offices of Robert Wayne Pearce, P.A

Sep 3, 2026

Unauthorized Trading: When Your Broker Trades Without Permission

Unauthorized trading is a broker buying or selling in your investment account without your permission and without the written authority to trade on their own. In a Ponzi scheme, the fraud is the investment itself, but here the fraud is the decision: someone else made it in your account. If a trade confirmation has ever arrived for a transaction you do not remember approving, you have seen how this problem announces itself. In this guide, our investment fraud lawyer team will walk you through what unauthorized trading is and what the FINRA rules require. We also cover how discretionary accounts change the answer, and how to spot unauthorized transactions on your statements. What Is Unauthorized Trading? Unauthorized trading happens when a broker or financial advisor places a trade in a customer’s account without instruction and without written discretionary authority. You gave that instruction either by directing the trade yourself or by signing a discretionary agreement beforehand. Outside of that, the trade was not the broker’s to make. The violation is the missing permission rather than the outcome, so an unauthorized trade is misconduct even when it makes money. Any financial harm it causes may be the firm’s to answer for. A profitable trade you never approved is still a decision someone else took with your account, and the next one may not be profitable. Federal law and FINRA rules both reach this conduct, from different directions. Because the rules are specific, it helps to see what they actually require. What the Financial Industry Regulatory Authority Rules Say The Financial Industry Regulatory Authority treats unauthorized trading as a violation of FINRA Rule 2010, which requires members to observe high standards of commercial honor and just and equitable principles of trade. Trading a customer’s account without proper authorization fails that standard on its face. FINRA Rule 3260 adds the specifics for discretionary accounts: no broker may exercise discretion in a client’s account until the customer has given prior written authorization and the brokerage firm has accepted the account in writing. Obtaining authorization first, in writing, and getting the firm’s acceptance is the rule’s whole point. The same rule bans discretionary trades that are excessive in size or frequency, which is where unauthorized trading meets excessive trading. We advise complaining promptly and in writing when a transaction you did not approve appears, because a dated written objection anchors everything that follows. So when exactly is a broker allowed to trade in your account without asking first? Discretionary vs. Non-Discretionary Investment Accounts A broker can trade without calling you first if you have a discretionary account, one where you’ve granted written trading authority and the firm has approved it. The SEC notes that a broker may be able to sell securities in a margin account without consulting you if the account falls below the firm’s requirements. But in other investment accounts, the broker needs your instruction before making a trade. It doesn’t matter what strategy you and the broker have already discussed. Our guide to discretionary and non-discretionary accounts covers how to choose between them. The line itself is the point: a verbal “you handle it” habit does not create discretionary authority, however friendly the relationship. Many investors believed a standing phone arrangement counted as permission. It does not, and that paperwork failure belongs to the firm rather than to you. How to Spot Unauthorized Transactions on Your Account Statements Your account statements and trade confirmations are where unauthorized transactions surface, usually within days of the trade. If you suspect unauthorized trading, we recommend reading each confirmation against what you actually instructed: If a trade you authorized is marked as unsolicited, that can raise questions. The best thing to do is object in writing the moment you see a trade you did not approve, and keep a copy. Because if you delay, it may become harder to dispute the trade later. Contact Our Investment Fraud Attorneys About Unauthorized Trading We understand how unsettling it is to find your account did things without you. The firm may argue you consented, and the paper record decides that argument. Here at the Law Offices of Robert Wayne Pearce, P.A., we have 45 years of experience representing investors and have recovered more than $185 million for our clients. Our success rate across litigation, arbitration, and settlements is 99%. We work on a contingency basis, so there is no fee unless we recover for you. Claims like these are heard in FINRA arbitration rather than in court. Call us at (800) 732-2889 for a free consultation, or read more about unauthorized trading claims and recovery.

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Sep 3, 2026

Unauthorized Trading: When Your Broker Trades Without Permission

Unauthorized trading is a broker buying or selling in your investment account without your permission and without the written authority to trade on their own. In a Ponzi scheme, the fraud is the investment itself, but here the fraud is the decision: someone else made it in your account. If a trade confirmation has ever arrived for a transaction you do not remember approving, you have seen how this problem announces itself. In this guide, our investment fraud lawyer team will walk you through what unauthorized trading is and what the FINRA rules require. We also cover how discretionary accounts change the answer, and how to spot unauthorized transactions on your statements. What Is Unauthorized Trading? Unauthorized trading happens when a broker or financial advisor places a trade in a customer’s account without instruction and without written discretionary authority. You gave that instruction either by directing the trade yourself or by signing a discretionary agreement beforehand. Outside of that, the trade was not the broker’s to make. The violation is the missing permission rather than the outcome, so an unauthorized trade is misconduct even when it makes money. Any financial harm it causes may be the firm’s to answer for. A profitable trade you never approved is still a decision someone else took with your account, and the next one may not be profitable. Federal law and FINRA rules both reach this conduct, from different directions. Because the rules are specific, it helps to see what they actually require. What the Financial Industry Regulatory Authority Rules Say The Financial Industry Regulatory Authority treats unauthorized trading as a violation of FINRA Rule 2010, which requires members to observe high standards of commercial honor and just and equitable principles of trade. Trading a customer’s account without proper authorization fails that standard on its face. FINRA Rule 3260 adds the specifics for discretionary accounts: no broker may exercise discretion in a client’s account until the customer has given prior written authorization and the brokerage firm has accepted the account in writing. Obtaining authorization first, in writing, and getting the firm’s acceptance is the rule’s whole point. The same rule bans discretionary trades that are excessive in size or frequency, which is where unauthorized trading meets excessive trading. We advise complaining promptly and in writing when a transaction you did not approve appears, because a dated written objection anchors everything that follows. So when exactly is a broker allowed to trade in your account without asking first? Discretionary vs. Non-Discretionary Investment Accounts A broker can trade without calling you first if you have a discretionary account, one where you’ve granted written trading authority and the firm has approved it. The SEC notes that a broker may be able to sell securities in a margin account without consulting you if the account falls below the firm’s requirements. But in other investment accounts, the broker needs your instruction before making a trade. It doesn’t matter what strategy you and the broker have already discussed. Our guide to discretionary and non-discretionary accounts covers how to choose between them. The line itself is the point: a verbal “you handle it” habit does not create discretionary authority, however friendly the relationship. Many investors believed a standing phone arrangement counted as permission. It does not, and that paperwork failure belongs to the firm rather than to you. How to Spot Unauthorized Transactions on Your Account Statements Your account statements and trade confirmations are where unauthorized transactions surface, usually within days of the trade. If you suspect unauthorized trading, we recommend reading each confirmation against what you actually instructed: If a trade you authorized is marked as unsolicited, that can raise questions. The best thing to do is object in writing the moment you see a trade you did not approve, and keep a copy. Because if you delay, it may become harder to dispute the trade later. Contact Our Investment Fraud Attorneys About Unauthorized Trading We understand how unsettling it is to find your account did things without you. The firm may argue you consented, and the paper record decides that argument. Here at the Law Offices of Robert Wayne Pearce, P.A., we have 45 years of experience representing investors and have recovered more than $185 million for our clients. Our success rate across litigation, arbitration, and settlements is 99%. We work on a contingency basis, so there is no fee unless we recover for you. Claims like these are heard in FINRA arbitration rather than in court. Call us at (800) 732-2889 for a free consultation, or read more about unauthorized trading claims and recovery.

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Aug 28, 2026

Delaware Statutory Trusts: How They Work, Risks, & Pros And Cons

A Delaware Statutory Trust (DST) is a passive real estate investment vehicle structured as a Regulation D private placement that allows investors to purchase fractional ownership interests in institutional-grade commercial properties. DSTs are most commonly used as replacement properties in IRC Section 1031 tax-deferred exchanges, and they are sold exclusively through registered broker-dealers and financial advisors to accredited investors—primarily retirees who have recently sold rental or investment real estate. If you lost money on a Delaware Statutory Trust due to a broker’s unsuitable recommendation, failure to disclose material risks, or inadequate due diligence on the DST sponsor, you may have a viable claim to recover those losses.

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Regulation Best Interest (Reg. BI) Better But Not the Best!

Aug 27, 2026

Reg BI (Regulation Best Interest): What Your Broker Owes You and What They Do Not

Regulation Best Interest is an SEC (Securities and Exchange Commission) rule that requires a broker-dealer to act in your best interest when it recommends a security to you, while a fiduciary duty is the continuing legal obligation an investment adviser owes to put your interests ahead of its own for the whole relationship. Reg BI governs the stockbroker who calls you with an idea and earns a commission on it. A fiduciary duty governs the registered investment adviser who manages your portfolio for a fee. It is more complicated than that, and there is a lot you need to know about Reg BI and the fiduciary duty before you decide whether your broker owed you more than you got. If a stockbroker put you into a product that paid him better than it paid you, you have every right to be angry. You may be entitled to recover what those recommendations cost you. The stockbroker fraud team at the Law Offices of Robert Wayne Pearce, P.A. has spent 45 years litigating claims like this one, on a contingency basis, which means there is no fee unless we recover for you. In this guide, we are going to walk you through what Regulation Best Interest actually requires, who it covers and who it leaves out, the dates that decide which standard governs your claim, how the two standards separate on timing and on conflicts, and where Reg BI still leaves you with less protection than an adviser’s client gets. What Is Regulation Best Interest (Reg BI)? Regulation Best Interest is the SEC rule, codified at 17 C.F.R. section 240.15l-1, that requires a broker-dealer and its registered representatives to act in your best interest when they recommend a securities transaction or an investment strategy to you. The rule forbids them from placing their own financial interest ahead of yours at the time that recommendation is made. The Commission adopted it on June 5, 2019, under the Securities Exchange Act of 1934. The general obligation is satisfied only when a firm meets four separate component obligations: disclosure, care, conflict of interest, and compliance. Three out of four is not compliance, and the SEC wrote the rule that way on purpose. Each obligation carries its own written requirements. A stockbroker who recommended a reasonable product can still have violated Reg BI if his firm never addressed the conflicts riding on that recommendation. Reg BI reaches recommendation and not the account as a whole. It applies when your stockbroker recommends a security, an investment strategy, or a type of account to open. It does not impose an ongoing duty to monitor the account, although agreed-upon account monitoring can lead to recommendations that are subject to Reg BI. What is Reg BI Care Obligation? The Regulation Best Interest rules require broker-dealers and their financial professionals to exercise reasonable diligence, care, and skill when making a recommendation to a retail customer. It ensures that professionals do not place their own financial interests ahead of the customer’s. The Care Obligation requires broker-dealers and financial professionals to exercise diligence, care, and skill when making investment recommendations. Instead of evaluating a product in isolation, advisors must thoroughly understand the investment, analyze the customer’s profile, and ensure the recommendation directly prioritizes the client’s best interest. To satisfy the Care Obligation, a financial professional must meet three core components: SEC Prosecution of Conflicts The SEC prosecutes Reg BI conflict violations by targeting firms that rely solely on fine-print disclosures instead of actively eliminating or mitigating financial biases. Rather than accepting a “check-the-box” approach, the SEC issues heavy fines, forces the return of conflicted revenue, and penalizes firms for weak internal controls. Key prosecution areas include: In the landmark case SEC v. Western International Securities, Inc., the SEC’s first-ever Reg BI enforcement action, brokers pushed $13.3 million of high-risk, unrated corporate bonds to customers with moderate risk tolerances because the products paid out high commissions, ignoring safer, lower-cost options. Who Does Reg BI Apply to? Reg BI covers broker-dealers and the natural persons associated with them. It does not cover investment advisers, who remain bound by the fiduciary standard under the Investment Advisers Act of 1940. On your side of the relationship, the rule reaches only a retail customer. The rule text defines that as a natural person, or the legal representative of one, who receives a recommendation and uses it primarily for personal, family, or household purposes. You probably already know that the person handling your account calls himself a financial advisor. The title on the business card settles nothing. Whether he is a stockbroker subject to Reg BI or an investment adviser subject to a fiduciary duty depends on how his firm is registered and which account the recommendation touches. Dual registrants are where this gets hard to follow. Many financial professionals are registered as a representative of a broker-dealer and as an investment adviser representative at the same time. The standard that applies changes with the hat they happen to be wearing. The SEC put it plainly in the adopting release. A dual registrant is an investment adviser only as to the accounts for which it gives advice and takes compensation that subjects it to the Advisers Act. Everything else it does for you falls under Reg BI, and the Commission acknowledged that delivering the relationship summary alone is not enough for a dual registrant to disclose the capacity it is acting in. What Are The 4 Reg BI Compliance Requirements? Next, in general terms, the “Best Interest” rule imposes four obligations upon broker-dealers and their associated persons: 1. Disclosure: to provide disclosures about the type of relationships they will have with their customer before or at the time of any recommendations (which will probably be buried somewhere in their website or the fine print of the 80-100 page customer agreement and disclosure booklets only made available via the internet when the account is opened). 2. Due Care: to exercise reasonable diligence, care, and skill in making the recommendation. 3....

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Aug 20, 2026

What is Financial Advisor Misconduct? Everything You Need to Know

Financial advisor misconduct is when a financial professional violates their legal and ethical obligations to act in your best interests. It can involve unsuitable investment recommendations, excessive trading, unauthorized transactions, misrepresentation of products, or outright theft of client funds. These violations cause undue financial harm to investors who placed their trust and their savings in the hands of an advisor who was supposed to protect them. Misconduct in the financial advisory industry is more common than most people realize, and it affects investors at every income level and stage of life. When it happens, you may be entitled to compensation through FINRA arbitration or other legal channels, depending on the facts of your case. Here at the Law Offices of Robert Wayne Pearce, P.A., we concentrate on cases involving financial advisor misconduct, breach of fiduciary duty, and related investment fraud claims. With over 45 years of experience and more than $185 million recovered for our clients, we understand what it takes to hold advisors and their firms accountable. In this guide, we will walk you through the most common types of misconduct, how widespread the problem is, how to check your advisor’s record, and what steps to take if you believe your advisor has acted against your interests. What is Financial Advisor Misconduct? Financial advisor misconduct can involve unethical or illegal behavior that violates the legal, regulatory, or professional obligations a financial professional owes to a client. If you trusted someone with your retirement savings or your family’s financial future, you deserve to know what misconduct looks like and when your advisor has crossed the line. Misconduct can range from recommending unsuitable investments to outright theft of client funds, and it takes many forms depending on the advisor’s relationship with the brokerage firm and the type of accounts involved. The Financial Industry Regulatory Authority (FINRA) oversees almost 640,000 registered financial professionals who collectively manage trillions of dollars in investable assets across the finance and insurance sector. A landmark study from researchers at Stanford University and the University of Chicago, published in the Journal of Political Economy, was the first to document the economy-wide extent of misconduct among financial advisers in the United States. The researchers studied financial advisers in the United States between 2005 and 2015, and their data represented about 10% of employment in the finance and insurance sector. What they found confirmed what many investors already suspected: misconduct is far more common than the industry has acknowledged. Common Types of Financial Advisor Misconduct The most frequent forms of advisor misconduct include: Unauthorized trading and the falsification of investment documents, including forging client signatures on transaction forms, give rise to customer disputes, FINRA complaints, and civil claims against both the advisor and the employing firm. How Common is Financial Advisor Misconduct? According to a prominent study published in the Journal of Political Economy (but originally from the National Bureau of Economic Research), about 7% of active financial advisers had a recorded history of misconduct, with the rate exceeding 15% at some of the largest advisory firms. The research also found: These findings suggest that misconduct can persist when advisers with prior records remain in the industry or move between firms. That’s why it’s important for investors to review an adviser’s professional history before entrusting them with their money. Why Misconduct Persists in the Financial Advisory Industry Misconduct persists because the labor market absorbs advisors with tainted records, and the commission structures used across the industry create direct incentives for recommending unsuitable products. Research from Duke University’s Fuqua School of Business found that investment funds maximize their profits by offering commissions to advisors who sell specialized, higher-risk products to clients. These commissions reward advisors for prioritizing fund revenue over client-investment fit. The consequences for advisers who engage in misconduct can be surprisingly limited. Advisers who lose their jobs after regulatory action can find work at other firms, especially firms willing to hire people with prior misconduct records. Those firms also face few consequences for repeatedly hiring advisers with a history of violations, which can make it easier for the cycle to continue. We understand how frustrating it is to learn that the system designed to protect you has structural weaknesses. When regulators improve their detection capabilities, funds respond by raising commission payouts to offset the increased risk of getting caught. Unethical advisors adapt as well, building clean reputations early in their careers and then increasing misconduct in later years when the reputational cost of getting caught has less impact on their accumulated earnings. Which Firms and Counties Have the Most Misconduct Some of the largest advisory firms in the United States have misconduct rates that are five to twenty times higher than firms with a clean reputation, and the concentration follows clear geographic and demographic patterns. The Stigler Center at the University of Chicago Booth School of Business publishes the Market for Financial Advisor Misconduct Index (chicagobooth.edu/research/stigler), which ranks firms, counties, and states by the percentage of advisors with misconduct disclosures. The underlying data is available for public download and provides an independent way to evaluate the track record of any firm you are considering. The research shows that misconduct concentrates at firms serving retail customers and in counties with lower education levels, elderly populations, and higher incomes. The findings are consistent with some firms catering to unsophisticated consumers who lack the resources to vet their advisors. By contrast, firms with cleaner records tend to serve clients who are better equipped to evaluate financial professionals. First Allied Securities and Oppenheimer had misconduct rates of nearly 18% or higher, while Morgan Stanley and Goldman Sachs were closer to 1%. How to Check a Financial Advisor’s Misconduct Record FINRA BrokerCheck is the primary tool available to the public for reviewing an advisor’s professional history, including customer disputes, regulatory actions, employment terminations, and criminal disclosures. You can search by the advisor’s name or their CRD number at the FINRA BrokerCheck portal. The full report gives you more detail than the summary, including information...

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Aug 20, 2026

What Is a Ponzi Scheme? Meaning, Madoff, & More

A Ponzi scheme is investment fraud that pays existing investors with money collected from new investors instead of profits from real business activity. In a Ponzi Scheme, the fraudster pays out fake returns to early investors using money from new investors without making any real profit. It is named after Charles Ponzi, who ran a famous Ponzi scam in the 1920s. If you have been offered an investment promising consistent double-digit returns with no apparent downside, you have already encountered the standard pitch. The structure behind it does not change. In this guide, our investment fraud lawyer team will walk you through how Ponzi schemes work, how Ponzi scheme promoters operate, famous cases, and the red flags that can help you spot one. We’ll even give advice on how you could get your money back, depending on the circumstances. What is a Ponzi Scheme? A Ponzi scheme is investment fraud that pays existing investors with money collected from new investors instead of profits from real business activity. Unlike mutual funds and other legitimate investments, no trading, lending, or operating business generates the returns. Every payout pulls from the same pool of incoming deposits. The promoter typically promises high returns with little or no risk, describes the strategy as proprietary or too complex to explain in detail, and points to early investors’ returns as proof that the investment works. Those early returns are real payments, but they come from other investors’ deposits, not from market performance. The scheme collapses when new deposits are no longer enough to cover what the promoter owes existing investors. And that can happen when fewer people put money into the scheme or when existing investors cash out all at once. How Do Ponzi Schemes Work Ponzi schemes move through five stages. Each one depends on the stage before it, and the entire structure fails the moment any single stage breaks down. Here’s how a Ponzi scheme typically works: Signs of a Ponzi Scheme The clearest signs of a Ponzi scheme are returns that never vary, withdrawals getting harder over time, and no independent custodian. We will elaborate more on each of these signs below: Red Flags You Are Dealing With a Ponzi Scheme The SEC (Securities and Exchange Commission) has published a consistent set of red flags that appear in many Ponzi schemes regardless of the product or technology involved. They are as follows: Ponzi Scheme vs Pyramid Scheme The Ponzi scheme and a pyramid scheme take the money in different ways. A Ponzi scheme usually keeps the source of the payouts hidden from investors. In a pyramid scheme, participants are told that recruiting new members is how they earn money. If you invest in a Ponzi scheme, you believe you hold a position in a trading account, lending pool, or business venture. The operator issues statements showing exactly that, which is why early investors recommend the opportunity in good faith. They do not know how their returns are funded. Pyramid scheme members pay a fee to join and are promised payments for recruiting new participants, with the organizers taking all or a large percentage of each fee. Participants know from the beginning that recruiting others is how they earn money, even if they do not fully understand the risks involved. Both require a continuous supply of new participants and collapse when that supply thins. These two schemes also make people who joined last absorb nearly the entire loss. Famous Ponzi Schemes The two largest schemes in US history show how long the structure can run when the operator carries institutional credibility. Bernie Madoff Bernie Madoff ran the largest Ponzi scheme on record and reached $64.8 billion in claimed value across two decades. His firm operated as a legitimate market maker before the fraud began, giving the investment arm credibility that no outside promoter could manufacture. He described the strategy as a split-strike conversion, a method involving blue-chip stocks and options. The account records were built from historical trading data covering activity that never occurred. When the 2008 financial crisis produced withdrawal requests he could not cover, the operation collapsed within weeks. He received a 150-year sentence and died in prison in 2021. Allen Stanford You may not have heard of Allen Stanford, but his scheme defrauded investors of roughly $7 billion, making it the second-largest in US history. Stanford issued certificates of deposit through his offshore bank in Antigua. The CDs promised fixed rates well above what US banks offered, backed by a portfolio he described as conservative and diversified. But the investments were not what Stanford had represented them to be. Because of that, he received a 110-year sentence in 2012, and receivership recoveries have returned only a fraction of investor losses over the years since. You may not have heard of Allen Stanford, but his scheme defrauded investors of roughly $7 billion, making it the second-largest in US history. FINRA Arbitration for Victims of Ponzi Schemes You can file a FINRA arbitration claim when a registered broker sold you the investment, even if the brokerage firm never approved the product. Selling an unapproved investment is often referred to as selling away, a practice where a broker offers securities or investments outside the firm’s approved product list. FINRA Rule 3280 restricts these transactions unless the broker follows the required notice and approval procedures. A firm that fails to detect or stop selling away can be held liable for the resulting investor losses in FINRA arbitration, even though the investment never appeared on the firm’s books. The brokerage firm may also be held responsible for the losses. While the promoter may have little left to recover by the time the scheme collapses, the brokerage firm may have other resources available to satisfy a claim. It’s important to know that there are two limits that apply. FINRA arbitration generally requires a FINRA member firm or associated person subject to FINRA’s arbitration rules. And Rule 12206 makes a claim ineligible once six years have passed from the...

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Aug 19, 2026

Equity Linked Notes: How They Work, What They Pay, and What You Can Lose

An equity-linked note (ELN) is a short-to-medium-term financial instrument issued by banks and other institutions. A bank borrows your money and agrees to pay you back on a set date, but instead of paying you regular interest along the way, your return depends on how a stock, a basket of stocks, or a market index performs over the term. With an equity-linked note, the bank splits your money between a bond that repays your principal and equity options that generate your upside. If the underlying rises, you collect a share of that gain. If it falls, what you get back depends entirely on the protection written into your terms, and plenty of these notes carry very little. As with all forms of investments, ELNs carry some risks. Take the time to understand what and where they come from to achieve better results. Below, our team of investment fraud lawyers will walk you through what these notes are, how the participation rates, caps, and barriers actually determine your payout, and which risks can cost you your principal, so you can make the best investment decisions moving forward. What is an Equity-Linked Note? An equity-linked note, or ELN investment, is a debt instrument whose payout depends on the performance of a stock, a basket of stocks, or a market index rather than a fixed interest rate. Banks and other financial institutions issue these notes with a set maturity date, and you collect your return on that date. When the note tracks an index, you may see it called an equity index-linked note. Most ELNs split into two pieces, with one portion that is often a zero-coupon bond sold below face value, and an equity option portion tied to the underlying. That second piece decides whether you earn anything above what you put in. If a broker sold you one of these as a safer alternative to stocks and you later discovered how much you had at risk, we understand how unsettling that is. How do Equity-Linked Notes Work? When a bank issues an equity-linked note, it spends part of your money on the bond component and the rest on equity options. If the issuer buys a zero-coupon bond large enough to repay your full principal at maturity, the note is called principal-protected, and you recover your original investment even when the underlying falls. Check the note’s terms to see whether principal protection applies. Plenty of issuers skip it. Instead, they offer a participation rate, which determines how much of the underlying’s gain passes through to the investor. Say the participation rate is 80% and the index rises 10% over the term. The investor receives the original principal plus 8%, and the bank that sold the note keeps the remaining 2%. Of course, there is a tradeoff, and it falls on your principal. When the underlying loses value, and your note carries no protection, that decline comes straight out of your investment. Participation Rates, Caps, and Leverage The participation rate sets your share of the gain from the underlying stock or market index, and the cost of structuring and managing the note usually pulls that rate below 100%. At a 75% participation rate, a 5% gain in the underlying earns you only 3.75%. A cap works in the opposite direction by putting a ceiling on your return, so once the underlying climbs past that level, additional gains stop reaching you. There is one more term you should look for. Some notes apply leverage, sometimes called gearing, which multiplies your exposure to the underlying’s movement. If your note has 150% upside gearing, a 10% gain in the underlying becomes a 15% return. Some notes also calculate returns using the average index level on several observation dates and not a single closing value. But if the index jumps near the end of the term, the late gain may not be fully reflected in your return. Equity-Linked Note Example Let’s walk one note through three markets so you can see how this plays out. Consider a $50,000 note with a two-year term, linked to the S&P 500, carrying a 120% participation rate, a 20% cap, and protection that holds only if the index closes at or above 85% of its starting level. Bull Market The index gains 15% over the two years. Your 120% participation rate turns that into an 18% return, which comes in under the cap, so you receive $59,000 at maturity. Had the index gained 25% instead, the cap would have limited your return to 20%, and the issuer would have kept the extra performance. Bear Market The index drops 25% and breaks the 85% barrier, so protection no longer applies and your principal absorbs the decline. You receive $37,500 back on a $50,000 investment. That same barrier did nothing for you in the good scenario, and here it is what costs you. Partial protection is not a guarantee, and the worst case usually appears deep in the offering documents. You may be feeling that nobody walked you through this outcome before you signed. Flat Market The index finishes where it started, and the underlying equity remains unchanged over the investment period. So, there is no gain to convert, and you receive your $50,000 back. Your statement may show no loss, but you also missed two years of dividends and the chance to earn a return. What Are the Benefits of Equity-Linked Notes? A broker likely sold you on the four points below, and each holds up under the right conditions. Higher Return Potential Linking returns to equities lets an ELN pay more than a conventional bond of similar length. That upside comes from the equity option component rather than from any coupon, which means it rises with your participation rate and shrinks under a cap. Principal Protection Principal protection means the issuer commits to returning your initial investment at maturity, funded by the zero-coupon bond inside the structure. Notes built this way are sold as principal-protected notes. Pull your own paperwork and...

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Aug 19, 2026

FINRA Series 65 vs. Series 7: What’s the Difference

The Series 7 licenses a person to sell securities for a commission, while the Series 65 licenses a person to advise clients for a fee. Take the Series 7 if you want to work at a broker-dealer and earn commissions on the stocks, bonds, options, and funds you place for clients. Take the Series 65 if you want to work at a registered investment adviser, charge fees for your advice, and owe a fiduciary duty to the people you serve. The investment fraud lawyer team at the Law Offices of Robert Wayne Pearce, P.A. has spent 45 years representing investors in claims involving both, and we see how often the license behind a recommendation shapes the claim that follows it. In this guide, we explain the key differences between the Series 65 and Series 7. We’ll cover what each exam authorizes, how hard each one is to pass, the other FINRA and NASAA exams you may see on a registration record, what happens when someone holds both, and how to check any of it yourself. What Is the Difference Between the Series 65 and the Series 7? The Series 65 and the Series 7 are securities licensing exams that authorize separate jobs. Your financial professional’s license affects the fees and the legal standard they follow when giving you advice. The Series 65, known as the Uniform Investment Adviser Law Exam, qualifies a person to register as an investment adviser representative, or IAR, and charge clients a fee for ongoing advice. The Series 7, or the General Securities Representative Qualification Examination, allows a person to work as a registered representative of a broker-dealer and earn commissions on the securities they sell. One person is paid for advice while the other is paid for transactions. You may also see the Series 65 referred to as a FINRA exam, but that’s not technically correct. The Series 65 belongs to the North American Securities Administrators Association (NASAA), and FINRA, the Financial Industry Regulatory Authority, only administers it on NASAA’s behalf, while the Series 7 is FINRA’s own exam. What Can Each License Holder Do? A Series 7 holder recommends and executes securities transactions for a commission, and a Series 65 holder gives continuing investment advice for a fee. Each license permits different activities. With a Series 7, a registered representative can sell you stocks, bonds, options, mutual funds, exchange-traded funds, and other investment company products. The firm earns a commission each time you transact. The recommendations provided are governed by Regulation Best Interest, the SEC rule requiring a broker to act in your best interest at the time a recommendation is made. A Series 65 holder registers as an IAR of a registered investment adviser, or RIA, and is paid a flat fee, an hourly rate, or a percentage of the assets under management for portfolio management and ongoing investment advice. That person owes you a fiduciary duty under the Investment Advisers Act of 1940, which is an ongoing obligation. Note on Investment Fraud: If something goes wrong, this distinction might affect your claim. A broker who put you into an unsuitable product is answering for a specific recommendation, while an adviser who let a portfolio drift against your stated goals is answering for an entire relationship. How Hard is Each Exam? Each exam focuses on different responsibilities, but both require serious preparation. The Series 7 runs 125 scored questions over 225 minutes, requires 90 correct answers to pass, and costs $395 as of 2026 after FINRA raised the fee from $300. A candidate also needs the Securities Industry Essentials exam as a co-requisite and a FINRA member firm to file a Form U4 opening the testing window, which in practice means no job offer, no Series 7. The Series 65 runs 130 scored questions plus 10 unscored pretest items over 180 minutes, requires 92 correct answers, and costs $187. No sponsor is needed, so anyone can open an enrollment window through FINRA and sit for it, which is why career changers often take it first. In some cases, someone holding an active CFP, CFA, ChFC, PFS, or CIC designation can request a waiver of the Series 65 in most states. So, your adviser may be registered as an IAR without ever having sat the exam at all. Other FINRA or NASAA Exams Two exam numbers rarely describe a securities professional’s full registration history. Most people who sell or advise on investments hold a stack of qualifications, and the other numbers on that stack tell you what else the person is permitted to do. Each one covers a narrower slice of activity, and either FINRA or NASAA owns each. When you pull a registration record and see a column of exam codes, these are the four you are most likely to find sitting alongside the Series 65 and the Series 7. SIE The Securities Industry Essentials exam is the entry-level FINRA exam covering products, markets, regulators, and prohibited practices. It carries 75 scored questions, costs $100, and requires 70 percent to pass. Anyone can take it without sponsorship, but on its own it authorizes nothing at all. It is a co-requisite for the Series 6 and the Series 7, and passing it does not permit anyone to sell you a security. Series 6 The Series 6 is a limited FINRA representative license covering investment company and variable contract products. A holder can sell mutual funds, variable annuities, variable life insurance, and unit investment trusts, and nothing beyond them. It’s common among bank and insurance channel representatives, and it pairs with the SIE the same way the Series 7 does. But a representative with only a Series 6 license is not authorized to sell individual stocks. Series 63 The Series 63 is NASAA’s Uniform Securities Agent State Law Examination, and it registers a person as a securities agent within a state. It runs 60 scored questions, requires 43 correct answers, and costs $147. The content is state law, prohibited practices, and the authority of...

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Citigroup Global Markets Broker Elijah Goble Under Investigation For Unsuitable Barrier Note and Improper Handling of Customer Account FINRA Complaints

Our firm is investigating Citigroup Global Markets Inc. broker and financial advisor Elijah Grant Goble (CRD# 6760147) of Costa Mesa, California for potential investment-related misconduct arising from customer complaints alleging an unsuitable coupon barrier note recommendation and improper handling of a municipal debt account. Elijah Grant Goble’s Financial Advisor Career History According to his FINRA BrokerCheck report, Elijah Grant Goble has been registered in the securities industry since 2017 and is currently licensed in numerous states and with multiple self-regulatory organizations. He is presently registered as a General Securities Representative and investment adviser representative with Citigroup Global Markets Inc. (CRD# 7059), working through Citi Retail Banking branch offices in Costa Mesa, California, and affiliated locations. He has been with Citigroup Global Markets Inc. since March 26, 2018. Goble’s prior investment-related employment includes: Merrill Lynch, Pierce, Fenner & Smith Inc. in Irvine, California, where he was employed as a financial advisor from February 2017 through March 2018 and registered with the firm from April 2017 through March 2018. Bank of America, N.A. in Irvine, California, where he served as a financial advisor from August 2017 to March 2018.

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Realta Equities and Realta Investment Advisors Broker Ashley Romiti Under Investigation For Unsuitable DST and Real Estate Securities Recommendations FINRA Complaint

Ashley Quinn Romiti (CRD# 7636987). Our firm is investigating Realta Equities, Inc. broker and Realta Investment Advisors, Inc. investment adviser representative Ashley Quinn Romiti of San Juan Capistrano, California for potential investment-related misconduct involving allegedly unsuitable recommendations in Delaware Statutory Trust (DST) and other real estate securities. Financial Advisor’s Career History According to her FINRA BrokerCheck report, Ashley Quinn Romiti is currently registered as a General Securities Representative with Realta Equities, Inc. and as an investment adviser representative with Realta Investment Advisors, Inc. She has been registered with both firms since March 3, 2025, working primarily out of San Juan Capistrano, California, while also listing a Wilmington, Delaware office address. Romiti has passed the Securities Industry Essentials (SIE) exam, the Series 7TO General Securities Representative Examination, and the Series 66 Uniform Combined State Law Examination. She is licensed in all 50 U.S. states, the District of Columbia, and Puerto Rico. Before joining Realta Equities and Realta Investment Advisors, Romiti was registered with Arkadios Capital (broker) and Arkadios Wealth Advisors (investment adviser) from July/August 2023 through March 2025. Prior to that, she was associated with Emerson Equity LLC as both a broker and investment adviser from November 2022 through November 2023, based in Irvine and San Mateo, California. Her employment history also includes investment-related business development roles at Perch Wealth, Verada, and Topside Real Estate, as well as non-investment-related positions in business development and case management

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