FINRA Charges James Brett Stuart: Faces Allegations of Negligence
On December 7, 2022, FINRA investigated James Brett Stuart (CRD #: 3022149), a broker previously registered with Richfield Orion International.
Stuart initially joined FINRA in 1998 and maintained his registration with them through his association with Richfield Orion in various roles, including as a General Securities Principal, from December 2007 to November 3, 2022. On the latter date, Richfield Orion submitted a Form U5, signaling Stuart’s voluntary termination of association with the firm.
| Employment | Employer Name | Date | Position | Investment Related Employer Location |
|---|---|---|---|---|
| RICHFIELD ORION INTERNATIONAL, INC. | 02/2008 – Present | FINOP, PRESIDENT | Yes | COLORADO SPRINGS, CO, United States |
Despite no longer being registered or affiliated with any member, Stuart is still under the authority’s jurisdiction for the current proceeding. This is by Article V, Section 4 of their By-Laws, as the complaint was filed within two years of his November 3, 2022, termination, and the allegations pertain to misconduct that occurred during his registration or association with any member.
Allegations on James Brett Stuart
Between September 2018 and August 2021, James Brett Stuart, the CEO, CCO, and majority owner of Richfield Orion International, Inc. (CRD No. 24433), did not establish an effective supervisory system for compliance with FINRA Rule 2111 and failed to address the Care Obligation of Rule 15l-1 of the Securities Exchange Act of 1934 (Reg BI) related to excessive trading in the firm’s written supervisory procedures (WSPs).
Stuart neglected to develop procedures for identifying and responding to red flags of excessive trading, and the WSPs did not cover Reg BI after its June 30, 2020, effective date.
Furthermore, Stuart inadequately supervised trading in the accounts of Customer A and Customer B. Despite receiving alerts indicating that these accounts incurred commissions exceeding 30% of their value, Stuart did not review or take appropriate steps to assess the consistency of frequent and high-cost trades with the customers’ investment profiles.
The recommended trading in these accounts resulted in cost-to-equity ratios of around 30%, with total costs of approximately $236,500 and $22,000 for each account, respectively. Consequently, Stuart violated FINRA Rules 3110(a), (b), and 2010.
Additionally, Stuart failed to fulfill their request for on-the-record testimony under FINRA Rule 8210 during its investigation. Although he initially appeared on May 18, 2022, Stuart requested an adjournment before completing his testimony. Despite subsequent requests from the regulatory authority to appear and complete the testimony, Stuart failed to do so, resulting in violations of Rules 8210 and 2010.
FINRA Investigation
On October 27, 2022, FINRA took a stern stance against J. Brett Stuart, recommending disciplinary action for alleged lapses in overseeing client account trading at Richfield Orion International.
The charges include potential excessive trading, and a breach of the watchful eye mandated by Rule 3110, which insists on robust supervision systems within firms to catch and prevent securities regulation violations.
Moreover, Stuart faces allegations of non-compliance with FINRA Rules 8210 and 2010, having purportedly failed to furnish requested testimony, information, and documents. Rule 2010, emphasizing high standards of commercial honor, and Rule 8210, compelling members to readily supply necessary records and testimony upon FINRA’s request, stand as the pillars of integrity and cooperation in the world of securities regulation.
Conclusion
In summary, the FINRA investigation into James Brett Stuart, the CEO, CCO, and majority owner of Richfield Orion International, Inc., revealed serious allegations of regulatory violations and inadequate supervision.
Stuart is accused of failing to establish an effective supervisory system for compliance, neglecting to address the Care Obligation under Reg BI, and inadequately overseeing trading in specific customer accounts.
The charges include potential excessive trading, a breach of FINRA Rule 3110, and non-compliance with Rules 8210 and 2010. Stuart’s failure to respond to FINRA’s requests for on-the-record testimony further compounds the alleged violations. The outcome of the disciplinary action could have significant implications for Stuart’s standing within the financial industry.
