The Financial Industry Regulatory Authority (FINRA) has taken enforcement actions against a former broker for violating Regulation Best Interest (Reg BI). Elba M. Nogueras, based in Guaynabo, Puerto Rico, accepted a four-month suspension and a $5,000 fine for her actions. Nogueras, who was registered with First Southern LLC, recommended that her client invest $81,000, or 81% of his liquid net worth, into a non-traded real estate investment trust (REIT). This investment was in direct violation of Reg BI, which requires brokers to consider their clients’ best interests when making recommendations.
FINRA highlighted that the REIT Nogueras recommended carried a high degree of risk and had limited opportunities for redemption. Despite these factors, Nogueras went ahead with the recommendation, earning a commission of $5,670 from the sale. The enforcement action by FINRA was initiated following an examination of First Southern.
This enforcement action reflects FINRA’s commitment to upholding the standards set forth by Reg BI. It demonstrates the consequences brokers may face for not adhering to the rule and not acting in their clients’ best interests. Hugh Berkson, the president of the Public Investors Arbitration Bar Association, commended FINRA for taking action but noted that this enforcement action doesn’t solely arise from Reg BI.
In a separate settlement, FINRA censured Network 1, a New Jersey-based broker-dealer, and its chief compliance officer for failing to comply with Reg BI in setting up a proper supervisory system.
First Southern, the firm Nogueras was registered with, has both a registered investment advisor and a broker-dealer. Nogueras left the firm in October 2021 and has not been registered as a broker or investment advisor since. Records show that Nogueras has a history of disclosures, including customer complaints and settlements for various amounts.
As the industry’s self-regulatory organization, FINRA continues to prioritize the enforcement of Reg BI to protect investors and ensure that brokers act in their clients’ best interests.
– Source 1 – Financial Industry Regulatory Authority (FINRA)
– Source 2 – Regulation Best Interest (Reg BI)