Sonn Law Group is investigating claims related to John Howard Towers (CRD #700221, Plano, Texas). Towers was associated with VSR Financial Service, Inc., from June 2002 to December 2013. Towers’ CRD reveals that he has been employed or conducted business through John H. Towers & Associates (Tyler, Texas), Personal Wealth Advisors, LLC (Plano, Texas), and VSR Advisory Services. The outside business disclosures on Towers’ CRD state that he has owned a precious metals brokerage since 1973.
Failure to Answer FINRA’s Questions
FINRA permanently barred Towers from association with any FINRA member firm pursuant to FINRA Rule 9552 in December 2015 following Towers’ failure to respond to a FINRA request for information. Towers CRD reveals 35 customer complaints, most of which were received between 2011 and 2015. Several of the recent disclosures indicate that upon receipt of a draft statement of claim, VSR Financial Services immediately settled the claim.
Previous FINRA Disciplinary Action
Towers previously entered into a FINRA Letter of Acceptance, Waiver and Consent (“AWC”) pursuant to which he was suspended for three months and fined $25,000. See FINRA Case No. 2012032353201. Pursuant to the 2013 AWC, FINRA found that Towers violated FINRA Rule 2010 and NASD Rules 2110, 2210(D) and 2310 by recommending that a married couple invest approximately $6,259,400 in high risk private placements and real estate investment trusts (“REITs”), which represented approximately 72% of the investments purchased through VRS Financial Services. FINRA found that the private placements and REITs recommended by Towers all were described in offering documents as high risk, while the couple had a moderate risk tolerance on their new account forms and specified that no more than 10% of their account should be invested in high risk investments. FINRA also found that the couple had told Towers they were uncomfortable with the volatility of the stock market, and that under the circumstances Towers’ recommendation to concentrate their portfolio in high risk private placements and REITS was unsuitable. FINRA further found that Towers provided consolidated statements to the couple for their accounts at VSR Financial Services for which Towers manually entered values for the private placements and REITS. The values entered for the private placements and REITs had no correlation to the prices published by the firm and despite knowing that the value of the investments had declined, Towers continued to list the couple’s original cost basis as the value of the investments, rather than the actual current value specified by VSR Financial Services.
The exact circumstances surrounding Towers’ recent permanent bar are unclear. The disclosure on his CRD indicates that pursuant to FINRA Rule 8210 FINRA sent Towers a request for information, to which he failed to respond. If a broker repeatedly fails to respond to FINRA’s requests for information or documents pursuant to Rule 8210, then FINRA can initiate non-summary suspension pursuant to Rule 9552. Under Rule 9552, FINRA typically sends another letter to the broker stating FINRA’s prior attempts to obtain documents or information and the broker’s failure to respond. The letter further advises the broker that he or she has 21 days to correct the deficiency, or be suspended from association with any FINRA member firm. At that point, the broker can timely request a hearing to avoid suspension. If the broker fails to request a hearing or otherwise does nothing within three months of issuance of the letters, the suspension becomes a permanent bar and the broker is permanently barred from association with any FINRA member firm. Thus, it appears that FINRA was requesting information from Towers as part of an investigation, and Towers’ not only failed to respond, but also defaulted under Rule 9552 resulting in a permanent bar. A permanent bar means the broker can no longer work in the broker dealer industry, which is a steep price to pay and indicates that the circumstances of FINRA’s investigation were significant and cooperation may have posed a greater risk to the broker than losing his or her license.
If you were a client of VSR Financial Services, Inc., or John H. Towers and have experienced investment losses or financial irregularities or invested in promissory notes, limited partnerships or other private placements, please call us at 844-689-5754 or complete our “contact form.” Sonn Law Group is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies.