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FINRA Sanctions Indianapolis Advisor Stu Pearl
Former Indianapolis stockbroker Stu Pearl (CRD# 1500833) has been sanctioned by the Financial Industry Regulatory Authority over findings he made unsuitable exchange-traded fund recommendations. Previously a representative of David A. Noyes & Company, he has been suspended from acting as a broker. He is still registered as an investment adviser with International Assets Investment Management in Racine, Wisconsin.
According to a Letter of Acceptance, Waiver and Consent (No. 2019060694202) issued in July 2021, was registered with David A. Noyes & Company, now known as Sanctuary Securities, from July 2015 until April 2019. The findings state that he recommended nine non-traditional exchange-traded fund purchases to four firm customers. As the AWC Letter notes, non-traditional ETFs “typically rebalance their portfolios on a daily basis” and FINRA has advised that they are usually not suitable “for retail investors who plan to hold them for more than one trading session.” In spite of this advice, Mr. Pearl’s customers held their ETF positions “for periods ranging from 100 to 600 days” and an average of 400 days. As a result of holding their positions for these lengthy periods, FINRA found, his customers sustained losses of approximately $80,000.
FINRA’s findings state that Mr. Pearl “failed to perform a reasonable basis suitability analysis” of the ETF products, and further that he “did not understand that losses in NT-ETFs are compounded because of how the valuations reset each day.” FINRA concluded that his actions constituted violations of FINRA Rules 2111 and 2010, issuing him a fine of $5,000 and a three-month suspension from associating with any FINRA member firm in any capacity.
Stu Pearl’s BrokerCheck report also discloses two recent customer complaints, of five total. The most recent, filed in 2020, alleged that as a representative of David A. Noyes & Company, he “created a margin trading account without discussing with them.” In May 2021 the complaint reached a settlement of $70,000. An earlier complaint, filed in 2019, alleged that he put “a large hedge position” in the account without the customer’s knowledge. The complaint reached a settlement of $42,500.
According to the Financial Industry Regulatory Authority, Stu Pearl holds 32 years of securities industry experience. He is not currently registered with any FINRA member firm, though SEC records show he is registered as an investment adviser with International Assets Investment Management in Racine, Wisconsin. His previous FINRA registrations include David A. Noyes & Company (Indianapolis, Indiana; 2015-2019), Ameriprise Financial Services (Deerfield, Illinois; 2010-2015), Morgan Stanley Smith Barney (Deerfield, Illinois; 2009-2010), Citigroup Global Markets (Deerfield, Illinois; 2001-2009), and Merrill Lynch (New York City, 1986-2001). His credentials include four securities industry qualifying examinations: the Uniform Investment Adviser Law Examination, or Series 65; the Uniform Securities Agent State Law Examination, or Series 63; the Securities Industry Essentials Examination, or SIE; and the General Securities Representative Examination, or Series 7. He presently holds no state licenses. (Information accessed on January 7, 2022.)
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