In connection with an investigation initiated by Oregon Adult Protective Services (APS) and later handled by the Oregon Division of Financial Regulation (the Division), former financial advisor, Gary Dodds (CRD# 3840109) of Bend, Oregon, has agreed not to apply for any financial services license or registration for a period of five years, effective January 9, 2021. As alleged by the Division, Dodds engaged in the practice of account churning in order to receive additional commissions from several of his elderly clients, from 2016 to 2018. In addition, his former employer, Raymond James Financial Services, Inc. (Raymond James) agreed to a civil fine of $200,000, as well as paying $123,279 in restitution to certain impacted elderly customers.

Mr. Dodds is a long-time securities industry professional with over four decades of industry experience, from 1977 to 2019. From 2011 until his separation from employment in April 2019, Mr. Dodds was affiliated with Raymond James in that firm’s Bend, Oregon branch office. As determined by the Division in the course of its investigation, Mr. Dodds placed certain of his elderly customers at risk by steering them away from more stable fixed income investments into riskier stocks, in order to capture additional commissions through excessive trading.

In one instance, the Division determined that Mr. Dodds changed the portfolio of one senior customer’s account – during the 2015-2017 time frame – from an approximate 50/50% balanced portfolio of stocks and bonds, to a portfolio consisting of approximately 67% equities and 33% fixed income. Further, the Division noted that at no time during this time frame had Mr. Dodds documented any changes to the impacted customer’s investment objectives or risk tolerance. Ultimately the Division determined that the actions led to certain impacted elderly customers being subjected to excessive trading: “Between January 1, 2015 and December 31, 2015, Dodds performed 77 transactions on [the impacted customer’s] account, which generated $24,371.68 in commissions for Dodds.”

As further determined by the Division in its investigation, Dodds failed to adhere to applicable industry rules as promulgated by the Financial Industry Regulatory Authority (FINRA). For example, his heightened supervision plan administered by Raymond James reflected “concerns that Dodds did not comply with FINRA Know Your Customer and Suitability rules.”

Pursuant to FINRA Rule 2111 (Suitability), brokerage firms and their associated persons “must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through…” reasonable diligence. A pattern of securities transactions may be quantitatively unsuitable if, when viewed together, they are excessive, the level of trading is inconsistent with the customer’s stated objectives and investment profile, and the broker exercises control over the customer’s account. While no single test defines what level of trading is excessive, certain factors including “the turnover rate and the cost-to-equity ratio are considered in determining whether a member firm or associated person has violated FINRA’s [quantitative] suitability rule.”

Investors who have suffered losses with Gary Dodds, or another financial advisor, may contact our office by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a no-cost and confidential consultation to learn more about their legal rights. The attorneys at Giarrusso Law Group LLC have extensive experience with handling all manner of claims on behalf of investors who have been victimized by securities fraud or related misconduct, including instances of excessive trading or account churning.