Joseph C Farah Audit (2023) – A Scam or Legit Broker?

Joseph C Farah  – and the firm that employs him or her – is regulated by the Financial Industry Regulatory Authority (FINRA).

If you are like most people, before you go out to dinner at a new restaurant, you probably take a quick look at the reviews. This makes sense; you are going to pay for an expensive dinner, and you need to be sure that you are getting a good value.

Yet, when choosing a financial advisor, many people fail to conduct this same level of due diligence. Before turning over access to your money, you need to be sure that you have found a financial advisor that you can trust. Here, our audit report, including details of allegations, complaints, and sanctions will help you decide whether or not to invest with Joseph C Farah.

BrokerComplaints.com is currently investigating allegations related to Joseph C Farah. We provide a free platform for investors to help them in their claims against negligent brokers and brokerage firms.

About Joseph Farah

Joseph C Farah is an Investment Adviser. Joseph C Farah’s Central Registration Depository (CRD) number is 2978633 and the FINRA Profile can be found at – https://brokercheck.finra.org/individual/summary/2978633.

Click here to download a Detailed Audit Report for Joseph C Farah.

Joseph C Farah has previously been reprimanded and has disclosures and/or client dispute(s) listed at FINRA BrokerCheck.

Accusations and Disclosures

You can find below, a quick snapshot of Joseph C Farah’s regulatory actions, arbitrations, and complaints.

DISCLOSURE 1 – 

• Event Date: 5/8/2017
• Disclosure Type: Regulatory
• Disclosure Resolution: Final
• Disclosure Detail :: DocketNumberFDA: 2014041432401
• DocketNumberAAO: 2014041432401
• Initiated By: FINRA
• Allegations: Farah was named a respondent in a FINRA complaint alleging that he willfully violated Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and FINRA Rules 2020 and 2010 by churning a customer’s account. The complaint alleges that Farah, with scienter, engaged in a manipulative, deceptive and fraudulent scheme. Farah acted with intent to defraud or, at the very least, with reckless disregard of the customer’s interests. Farah knew that the customer had a limited income and net worth, no investment experience, was supporting her children, and unable to tolerate any significant loss. But Farah, nonetheless, day-traded the customer’s account with the entire attendant risks and costs and without discussing any of the transactions with the customer. Moreover, Farah concealed what he was doing by failing to disclose that he was associated with a broker-dealer on the trading authorization agreements of an executing member firm, and by lying on his member firm’s annual compliance questionnaires. The complaint also alleges that Farah engaged in excessive and unsuitable trading in the customer’s account. Farah controlled the customer’s account. Farah’s trading in the customer’s account with the executing firm created risks that were incompatible with her investment needs and welfare. The trading was, as evidenced by the number of trades, the extraordinary turnover rate, and the cost-to-equity ratio, excessive and inconsistent with the customer’s investment objective and financial situation. The complaint further alleges that Farah failed to provide his firm with written notice of his discretionary authority over the executing firm’s accounts held by the customer and others (three individuals and one entity), and he failed to provide written notice to the executing firm that he was associated with his firm. In addition, the complaint alleges that Farah failed to provide his firm with prior written notice -and, indeed, any notice at all- of his creation of, and involvement with, an outside business activity. Moreover, the complaint alleges that Farah made material misrepresentations to his firm by falsely responding to questions on the firm’s compliance questionnaires, more explicitly, concerning his outside business activity and his arrangements with customers giving him the discretion to enter orders for their accounts.
• Resolution: Decision & Order of Offer of Settlement
• Sanction Details :: Sanctions: Bar (Permanent)
• Sanction Details :: Registration Capacities Affected: All capacities
• Duration: Indefinite
• Start Date: 1/25/2018
• Regulator Statement: Without admitting or denying the allegations, Farah consented to the sanction and to the entry of findings that he engaged in excessive and unsuitable trading in the customer’s account. The findings stated that Farah controlled the customer’s account and his trading in the customer’s account at another broker-dealer created risks that were incompatible with the customer’s investment needs and welfare. The trading was, as evidenced by the number of trades, the exorbitant turnover rate, and the cost-to-equity ratio, excessive and inconsistent with the customer’s investment objective and financial situation. The findings also stated that Farah failed to provide his member firm with written notice of his discretionary authority over accounts at the other broker-dealer held by five customers, and he failed to provide written notice to the other firm that he was associated with his firm. The findings also included that Farah failed to provide his firm with prior written notice, or any notice at all, of his creation of, and involvement with, a financial services company. FINRA found that Farah made material misrepresentations to his firm by falsely responding to questions on the firm’s annual compliance questionnaires, certifying that they were accurate, and submitting them to the firm. The allegations made in the complaint of fraud, in violation of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and FINRA Rule 2020, were removed.

DISCLOSURE 2 – 

• Event Date: 9/15/2015
• Disclosure Type: Employment Separation After Allegations
• Disclosure Resolution:
• Disclosure Detail :: Firm Name: Gold Coast Securities, Inc.
• Termination Type: Discharged
• Allegations: FINRA alleges that the representative was a partial owner of an outside business without notice to and approval by the firm in violation of FINRA Rules 2010 and 3270. FINRA alleges that the representative had discretionary authority over a customer’s account at another broker-dealer without notifying the firm of his affiliation in violation of FINRA Rule 2010 and NASD Rule 3050.

DISCLOSURE 3 – 

• Event Date: 8/4/2015
• Disclosure Type: Customer Dispute
• Disclosure Resolution: Closed-No Action
• Disclosure Detail :: Allegations: The complainant allged that, between October 8, 2012 and October 7, 2013, the representative traded her account at another broker-dealer resulting in losses. The complainant allged that the representative told her the account at the other broker-dealer would not lose more than 5%, and tha thte gains would fund the premiums for a fixed indexed universal life insurance policy.
• Damage Amount Requested: $8,970.06
• Arbitration Docket Number:

According to a study prepared for the FINRA Investor Education Foundation, 80 percent of American investors report that they have been solicited to participate in a fraud scheme, while 11 percent of American investors report that they personally lost money as a result of fraud.

FINRA notes that the rate of investment fraud is most likely much higher than it is reported. This is because many victims of financial advisor scams are too ashamed to come forward. Further, the study also found that a significant number of investors do not know how to spot common red flags of investment fraud. The least you should do is share your experience with other potential victims of investment scams.

Previous Associations

Under federal securities law and securities industry regulations, registered investment firms have a legal duty to supervise their financial advisors. Section 15(b)(4)(E) of the Securities and Exchange Act of 1934 makes a securities firm liable for the conduct of representatives.

• GOLD COAST SECURITIES, INC. (CRD#: 110925) :: 9/3/2002 – 9/15/2015 :: IRVINE, CA
• NATIONAL PLANNING CORPORATION (CRD#: 29604) :: 7/1/1998 – 9/3/2002 :: LOS ANGELES, CA
• FINANCIAL NETWORK INVESTMENT CORPORATION (CRD#: 13572) :: 3/13/1998 – 7/6/1998 :: EL SEGUNDO, CA

The duty to supervise securities representatives is a strong legal requirement. Registered investment firms must take many different steps to ensure that they are protecting their customers from irresponsible and criminal financial advisors.

Legit or Not?

Unfortunately, stockbroker fraud is more common than many investors would like to think. And yes, stockbrokers (including Joseph C Farah, but not limited to)  can (and do) steal money from their clients. While it’s rare that a broker will literally steal his client’s money (though that does happen), typically the “theft” of investment funds comes in the form of other fraudulent violations of securities law and FINRA rules which leads to significant investment losses.

Investors generally understand that there are risks associated with buying and selling securities. The market can go up, and the market can go down. No matter how skilled of an investor you are, there are always risks. With that being said, sometimes investment losses cannot be blamed on simple back luck.

There are 10 major types of complaints we receive against Investment Brokers –

• Outright Theft (Conversion of Funds)
• Unauthorized Trading
• Misrepresentation or Omission of Material Facts
• Excessive Trading (Churning)
• Lack of Diversification
• Unsuitable Investment Recommendations
• Failure to Disclose a Personal Conflict of Interest
• Front Running of Transactions
• Breakpoint Sale Violations
• Negligent Portfolio Management

Do your due diligence before investing. Public records are available for everybody to review and decide on the safest bet. 

How to Protect Yourself

We, as citizens, place a great deal of trust in the financial advisors who are tasked with helping us achieve and maintain financial security. Most of the time financial advisors and stockbrokers are honest folks who work diligently in their client’s best interests. However, on occasion financial advisors and the brokerage firms who employ them mess up and cause serious financial harm to their clients. Sometimes these losses are caused by simple negligence. Other times fraud or other serious misconduct is to blame.

Here are 5 signs that your broker needs to be reported –

• Breach of Fiduciary Duty: Under the Investment Advisers Act of 1940, certain investment professionals, known as registered investment advisors (RIAs), owe fiduciary obligations to their customers. Your investment broker must always look out for your best interests. If you lost money because of your broker’s breach of fiduciary duty, you may be entitled to compensation for the full value of your damages.
• Unsuitable Investments: Many financial advisors are not fiduciaries. Instead, they are held to the suitability standard. These stockbrokers and financial advisors can only sell and recommend financial products that are appropriate for a customer’s unique investment profile. If you lost money in unsuitable investments, you should consider reporting them.
• Material Misrepresentations or Omissions: Brokers have a duty to make fair and honest representations to their clients. If they fail to do so, and an investor loses money due to a misrepresentation or a material omission, the broker may be liable for the investor’s losses.
• Lack of Diversification: Brokers must also act with the appropriate level of professional skill. Pushing a customer into over-concentrated investments is highly risky. Brokers can be held liable for losses sustained because of an investor’s inappropriate lack of diversification.
• Excessive Trading (Churning): Stockbrokers and financial advisors must have a well-grounded, reasonable basis to execute all trades. Unfortunately, there are cases in which brokers will frequently trade on a customer’s account, simply to increase their own fees. This unlawful practice is known as churning.
• Unauthorized Trading: Brokers must have the proper legal authority to make transactions on behalf of a client. If you lost money because your broker made trades that you never approved of, you may have been the victim of unauthorized trading. You should consult with an experienced attorney.

Report Joseph Farah

In order to prevail in an investment fraud lawsuit or FINRA arbitration cases, you must be able to assert a viable ‘cause of action’.

Joseph C Farah – and the firm that employs this broker – is regulated by the Financial Industry Regulatory Authority (FINRA). FINRA provides an online form to allow investors to file a formal complaint against their financial advisor, stockbroker, or brokerage firm.

Click here to go to FINRA’s Online Complaint Form →

This form will ask you for specific information related to your complaint. Be prepared by gathering the following:

• Name and symbol for the investment product in question.
• The CRD number (2978633) for the broker – Joseph C Farah
• Your complete contact information.

Remember, it is advised to report your broker to FINRA, only after you have exhausted all of your other remedies and carefully prepared a compelling complaint.  Once you file a complaint against your broker at FINRA, your case will be bound by FINRA’s rules and the arbitration panel’s eventual decision. The time clock will start, and your complaint will be served on your broker or broker-dealer.

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