Kevin Schaefer (Kevin Joseph Schaefer CRD:# 1286030) is a registered broker and investment advisor currently employed with Wells Fargo Clearing Services, LLC (CRD#: 19616) of San Francisco, CA. His previous employers include Morgan Stanley Smith Barney LLC (CRD#:149777) and UBS Financial Services Inc. (CRD#:8174), both of San Francisco, and Smith Barney Shearson Inc. (CRD#:7059) of New York, NY. He has been in the industry since 1984.
Schaefer is the subject of two currently pending disputes. The first, filed on 6/12/2020, alleges “unsuitable investment recommendations and misrepresentations.” The client requests damages of $1,000,000.
The second, filed on 6/4/2020, alleges “unsuitable investment recommendations, failure to follow instructions and misrepresentations from 2012 until 2020.” The client requests damages of $300,000.
Unsuitable Investment Recommendations
Brokers and broker-dealers are regulated by federal securities laws and FINRA rules and standards and are required to make suitable investment recommendations pursuant to FINRA Rule 2111 “Suitability” and FINRA Rule 2090 “Know Your Customer.”
That means a broker needs to have “a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable” based upon the customer’s investment profile. The investment profile is determined by factors such as the customer’s financial situation, age, tax status, investment objectives, other investments, investment experience, investment time horizon, liquidity needs, and risk tolerance.
The suitability of an investment or investment strategy is also determined by an investor’s ability to understand the risks associated with it.
FINRA rules state that stockbrokers have an obligation to ensure a recommended series of transactions in a customer’s account appear suitable when viewed in isolation and also when viewed in aggregate. Overall, the transactions in the account must not be excessive or unsuitable when viewed in aggregate given the customer’s investment profile (also referred to as Quantitative Suitability).
Unsuitability of investment recommendations is a common cause for investors in FINRA arbitration claims.
Did You Invest With Kevin Schaefer?
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