According to publicly available information via FINRA BrokerCheck, dually registered broker and investment adviser Joseph Ijong Chu (Chu, CRD# 4546805) has disclosed three pending customer complaints in 2020. These matters generally relate to allegations that Mr. Chu unsuitably recommended investments in the “oil and gas or energy sectors” and purportedly failed “to properly diversify” certain customer accounts in “highly volatile investments.”

Mr. Chu is a longtime securities industry professional with 18 years of experience as a stockbroker and investment adviser. From 2002 until August 2018, he was employed by Merrill Lynch in that firm’s Greenwich, CT branch office. Since August 2018, he has been affiliated with RBC Capital Markets, LLC (RBC) in their Stamford, CT branch office. Of the three pending customer disputes filed in 2020 naming or otherwise involving Mr. Chu, his customers are seeking aggregate damages of $2,467,453.

With regard to one pending matter, the customer is alleging unsuitable investment recommendations in “oil-producing and industrial metals & materials stocks leading to an overconcentration in those sectors…” which led to account losses “from September 2018 through January 20, 2020.” When a financial advisor recommends an oil and gas investment to a client, the advisor should first seek to inform his or her client of the risks associated with investing in the volatile oil and gas market.

Financial advisors like Mr. Chu have a legal duty and regulatory obligation to perform a suitability analysis to determine if an investment (or investment strategy) is suitable in light of a customer’s profile and stated investment objectives. Reasonable basis suitability, as set forth under FINRA Rule 2111, requires that a recommended investment (or investment strategy) be suitable or appropriate for at least some investors. In order to adhere to the reasonable basis standard, a brokerage firm—and by extension that firm’s financial advisor—must conduct adequate due diligence on an investment so that the financial advisor may evaluate the risks and rewards of the investment.

Furthermore, financial advisors like Mr. Chu must also ensure that they meet their customer-specific suitability obligations, which require an advisor to have a reasonable basis to believe that a specific investment recommendation (or investment strategy) is suitable for a particular customer based upon his or her profile. Under FINRA Rule 2111, certain criteria must be evaluated to conduct a suitability analysis, including an investor’s age, financial situation and needs, tax status, investment objectives and risk tolerance, as well as time horizon and liquidity needs. In instances where a financial advisor makes an unsuitable recommendation, which may include negligently permitting an investor’s account to become over-concentrated in volatile oil and gas investments, then the advisor and his or her brokerage firm may well be held liable for losses suffered.

The attorneys at Giarrusso Law Group LLC possess considerable experience in successfully representing aggrieved investors who have suffered losses in volatile oil and gas investments, including energy stocks, oil and gas junk bonds, MLPs and more esoteric private placement investments. In many instances, investors may pursue claims to recover losses through securities arbitration before FINRA. Investors who wish to discuss a possible claim related to an oil or gas investment may contact us by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a complimentary and confidential consultation.