South Florida-based Soreide Law Group, (888) 760-6552, obtained the following information from FINRA's website under “Disciplinary and Other FINRA Actions, April, 2016.”
Stuart Horowitz (CRD #2795019, Coral Springs, Florida)
was assessed a deferred fine of $100,000 and suspended by FINRA for one year for allegedly recommending and engaging in unsuitable trading in preferred notes of an unregistered limited partnership investment fund.
FINRA’s findings stated that his recommendations lacked a reasonable basis because he failed to adequately investigate red flags that the fund was not a viable investment.
Shortly after Horowitz’s association with his member firm, he began sending emails to firm personnel requesting a quick approval process for the preferred notes. The offering documents for the preferred notes did not specify a deadline by which conversion requests had to be completed, although they did set a cap on the amount of money that could be converted to preferred notes.
Stuart Horowitz attempted to persuade his clients to not participate in this conversion directly with the issuer even though they could have done so without the firm’s and Horowitz’s participation.
Horowitz’s previous broker-dealer did not to allow its representatives to sell the preferred notes to that firm’s clients due to concerns about the fund’s ability to generate income for investors. Horowitz’s new firm advised him that it was awaiting an independent third-party due diligence report before approving the preferred notes for sale by the firm.
Horowitz requested that he be permitted to sell the preferred notes to his existing clients, even though the firm had not received the third-party report. The next day the firm agreed to allow Horowitz to offer the preferred notes for sale to existing investors in the fund. Horowitz recommended the conversion of his clients’ interests to the preferred notes although the firm had not obtained the third-party due diligence report and Horowitz had done nothing more than review the preferred notes offering documents and other written and oral representations the fund had made.
Horowitz was aware of red flags and soon Horowitz’s branch office converted over $8 million of existing interests to the preferred notes, which required additional capital contributions from his clients of just over $2.5 million. Horowitz was responsible for all but $137,500 of these conversions, and he was paid more than $200,000 in net commissions from the conversion process.
The fund began making late payments to the preferred note holders, and within months stopped making payments altogether.
FINRA’s findings also stated that Horowitz did not apprise his firm of any of the red flags. Despite Horowitz’s increasing knowledge of severe problems the fund had, he continued to recommend his clients convert their interests to the preferred notes. Horowitz’s staff processed some conversions on behalf of his clients even after he had learned that distributions on existing interests had been reduced to zero.
The suspension is in effect from March 7, 2016, through March 6, 2017.
(FINRA Case#2013036692001)
Stuart Horowitz was in the securities industry for 19 years and has 36 Customer Disputes listed on FINRA's BrokerCheck. He was registered with the following firms:
02/2009 - 01/2016 SECURITIES AMERICA, INC. - CORAL SPRINGS, FL
07/2005 - 02/2009 NFP SECURITIES, INC. - CORAL SPRINGS, FL
11/2000 - 07/2005 COMMONWEALTH FINANCIAL NETWORK - WALTHAM, MA
If you were a client of Stuart Horowitz formerly with Securities America, Inc. of Coral Springs, Florida, and experienced financial losses due to his recommendations, call the South Florida based Soreide Law Group for a free consultation on the possible recovery of your losses at: 888-760-6552.
Soreide Law Group represents clients nationwide before FINRA.
