Regulation Best Interest (Reg BI) was approved in 2019, although enforcement has only picked up this year. The law requires brokers to only recommend products to customers that are in their best interest. Brokers also have to be transparent with customers about any potential conflicts of interest and financial benefits to recommendations they make. 

For Investment Executive, James Langston covers Monmouth Capital Management’s multiple violations of Reg BI which has led to expulsion from the industry from FINRA. Monmouth is being charged with excessive trading of 110 client accounts between August 2020 and February 2023 by 6 company reps, leading to losses of $3.9 million. 

Unfortunately, many of the victims included ‘Gold Star’ families with their investment proceeds coming from death benefits from a family member passing away while serving in the military. 

 In addition to FINRA taking action against the brokerage, the Department of Justice and SEC charged Caz Craffy, a former US Army financial counselor and Monmouth broker, for defrauding clients through excessive trading and risky investing. He also had a blatant conflict of interest given his dual roles as a broker and financial counselor. Overall, he earned $1.4 million in commision from clients with losses of $3.4 million due to bad trades. 

Finsum: FINRA, the SEC, and Department of Justice are pursuing action against Monmouth Capital Management due to violations of REG BI and mismanagement of clients’ funds.