Adviser hit with $750k in penalties for bad investment recommendations

A Rumson financial advisor had his registration revoked and was hit with $750,000 in penalties after making investment recommendations that were inconsistent with clients’ needs and risk tolerance, Attorney General Gurbir Grewal and the Division of Consumer Affairs announced on Wednesday.

Gabriel Block recommended investments to his clients that generated at least $1.6 million in commissions and fees for himself and his broker-dealers at the expense of his clients, according to the New Jersey Bureau of Securities.

From December 2008 to March 2015, Block introduced trading in clients’ accounts designed to maximize his commissions without regard to how appropriate they were for the clients, according to the Bureau. He preyed on inexperienced and unsophisticated investors, according to the OAG.

“Block callously steered his clients toward riskier trades that put more money in his own pocket, instead of recommending securities or an investment strategy that was suitable for investors. This was a pattern of practice that was not only illegal, but made all the more offensive because he preyed on the vulnerable,” said Paul Rodríguez, acting director of the Division of Consumer Affairs, in a statement. “The Bureau’s action today sends a clear message that New Jersey will vigorously enforce the law to protect investors from being taken advantage of.”

Block’s victims include a 36-year old quadriplegic construction-accident victim, a 43-year old unemployed and widowed mother of three children; and a 75-year old retired and widowed mother-in-law.

New Jersey Securities Law and the Financial Industry Regulatory Authority rules require financial advisers to be reasonable when recommending a security or an investment strategy to a client.

“The financial exploitation of any client is a shameful breach of trust, but Block’s conduct is even more repugnant because he took advantage of unsophisticated, financially vulnerable clients who had entrusted him with money they needed to live on,” said Christopher Gerold, chief of the Bureau of Securities, in a statement. “Violators like him must receive the strongest possible penalties, not only to hold them accountable for their misdeeds but also to serve as a deterrent to others in the industry.”

Gabrielle Saulsbery
Albany, N.Y. native Gabrielle Saulsbery is a staff writer for NJBIZ and the newest thing in New Jersey. You can contact her at gsaulsbery@njbiz.com.

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