The US Securities and Exchange Commission is investigating Westlake Village, California stockbroker Thomas Swan (CRD# 1698430) over alleged violations of...Read More
James Armstrong Sr.: FINRA Suspends Royal Alliance Advisor Over Alleged Supervisory Failures
A disciplinary action taken by the Financial Industry Regulatory Authority against former Wake Forest, North Carolina broker and investment advisor James Armstrong Sr. (CRD#) suspended him over allegations he failed to supervise a registered representative who made unsuitable investment recommendations to four elderly customers. A former representative of Royal Alliance Associates, Armstrong was suspended from acting in a principal capacity for two months and fined $5,000.
According to a Letter of Acceptance, Waiver and Consent () dated December 2018, James Armstrong Sr. was a general securities principal and general securities representative at Royal Alliance Associates when, between February 2012 and March 2015, he and his son failed to reasonably supervise a registered representative under their supervision. FINRA’s findings state that Armstrong Sr. delegated daily supervision of the representative to his son, but was ultimately responsible for the supervision of representatives at the office in question.
FINRA’s findings go on to describe the alleged underlying conduct by the representative, Mark Perry. During the period in question, he allegedly made unsuitable recommendations to four elderly customers when he over-concentrated their accounts in securities in the precious metals sector, as well as by “recommending… they purchase and hold leveraged mutual funds and/or ETFs [exchange-traded funds] in their accounts for extended periods of up to 963 days.” FINRA’s findings state that when a customer complained to the representative about transactions in his account, Perry made “misleading and promissory statements” in response. He also allegedly did not report other complaints alleging unsuitable transactions, and “misstated a customer’s risk tolerance on several Royal Alliance new account forms.” His allegedly unsuitable activity led to losses exceeding $200,000 across the customers’ accounts, according to FINRA.
According to FINRA’s findings, James Armstrong Jr. ignored red flags that indicated potentially unsuitable activity in Perry’s customers’ accounts. When he “became concerned about Perry’s aggressive trading style” and concentration of high-risk investments in his accounts, in or around June 2014, Armstrong Jr. informed Armstrong Sr. of these concerns, according to FINRA, and recommended Perry’s termination. However, according to FINRA, Armstrong Sr. declined to take action against the representative “Without conducting any investigation” into his trades or arriving at a determination about the trades’ suitability. FINRA states that “Perry’s unsuitable trading activity continued unabated for several more months” because James Armstrong Sr. did not respond in a reasonable manner. FINRA’s findings state that this conduct violated NASD Rule 3010(a) and FINRA Rules 3110(a) and 2010. James Armstrong Sr. was consequently suspended from all principal activities for two months and ordered to pay a fine of $5,000.
James Armstrong Sr. is not currently registered as a broker or investment advisor. His employment history includes Royal Alliance Associates in Wake Forest, North Carolina, Integrated Resources Equity Corporation, IDS Life Insurance Company, American Express Financial Advisors, and IDS Financial Services. He currently holds no state licenses and has passed eight securities industry qualification examinations.