Brian Stephan: Former Ohio Advisor Suspended Over Mutual Fund Recommendations

A disciplinary action taken by the Financial Industry Regulatory Authority against former Xenia, Ohio broker and investment advisor Brian Stephan (CRD# 4222796) suspended him over allegations he recommended unsuitable investments to an elderly customer. A former representative of American Wealth Management, Stephan was fined $10,000 and suspended for eight months from acting as a broker.

According to an order accepting an offer of settlement (No. 2014042022401) dated April 2019, Brian Stephan was named in a FINRA complaint detailing allegations he recommended and caused the execution of unsuitable investments in the account of an 88-year-old customer of his member firm. FINRA’s complaint alleged that the investments in question were mutual fund Class A shares across 20 mutual fund families. The investments were unsuitable for the customer, according to FINRA, because the investors “would have been able to achieve a discount on applicable sales charges by aggregating her mutual fund purchases into fewer fund families.” The complaint also stated that in about ten instances Stephan recommended a mutual fund investment at an amount “slightly less” than the threshold at which the investor could receive sales charge discounts. Accordingly, FINRA alleged, these recommendations resulting in the customer incurring “excessive sales charges” as well as higher commissions to Stephan. Specifically, FINRA stated, the transactions generated more than $60,000 in commission payments, whereas an investment “in larger amounts across fewer fund families” would have allowed the customer to enjoy sales charge discounts and pay about $30,000 less in costs.

FINRA’s complaint alleges that in addition to recommending investments in a wide range of mutual fund families with no consideration of possible discounts, Brian Stephan “mismarked transactions and provided false information on his member firm’s mutual fund exchange forms.” Specifically, according to FINRA, he indicated that solicited transactions were unsolicited, and “erroneously” reported that certain mutual fund exchange transactions were performed due to the customer’s dissatisfaction with the investments. In these cases, FINRA states he marked the exchanges as “unsolicited” when in reality he had recommended them and the investor had not made any complaints about the original investments. FINRA alleged that this conduct caused Brian Stephan’s firm to maintain inaccurate books and records. As a result of this and other foregoing alleged conduct, Brian Stephan was suspended from acting as a broker for eight months, ordered to pay a fine of $10,000, and ordered to pay restitution of $29,430.

Brian Stephan is not currently registered as a broker or investment advisor. His employment history includes American Wealth Management in Xenia, Ohio, Commonwealth Financial Network, LPL Financial, and Edward Jones. He currently holds no state registrations and has passed five securities industry qualification examinations.