National investment loss lawyers KlaymanToskes encourages former and current customers of BBVA Securities and PNC Investments who suffered investment losses to contact the firm immediately at 888-997-9956.
KlaymanToskes reports that the firm has filed a FINRA arbitration claim (no. 23-00925) against BBVA Securities and PNC Investments in connection with their representatives’ recommendation to use a customer’s inherited assets as collateral for a line of credit.
The claims alleges that the firms and their representatives improperly pledged inherited assets against a line of credit, failed to properly hedge and/or diversify pledged assets, failed to act in the “best interest” of the customer, misrepresented material facts, breached their fiduciary duties, failed to supervise, and acted negligent, in violation of the Texas securities laws and violation of the Federal Securities laws.
The customer inherited investment accounts from her father’s Will upon his passing, consisting of an IRA and a taxable individual account. The accounts contained various securities that the customer’s father, who was a financial advisor, managed for himself.
After inheriting her father’s accounts, the customer was introduced to a banker with BBVA, Ray Pena, with whom she discussed her intentions to purchase a home with her then-husband. Then, a loan officer with BBVA, Marc Schkudd, allegedly recommended that the customer and her now ex-husband open a line of credit using her inherited securities as collateral.
The customer’s banker, Pena, introduced her to Juan Rascon, a BBVA Compass Investment Solutions broker/investment advisor located in Houston, Texas. Allegedly, both Pena and Rascon endorsed the recommendation to use the inherited securities as collateral for the line of credit. BBVA Compass Investment Solutions later became BBVA Securities.
The customer informed Rascon that the investment accounts she inherited from her father represented a substantial portion of her wealth. After meeting with Rascon, the customer transferred her father’s accounts into Compass/BBVA. The customer was under BBVA’s “Wealth Management” umbrella that provides investment services for the firm’s top clients. This entitled her to receive the services and strategies that the firm has available for its high-net-worth clients.
Under the advice of BBVA, a joint line of credit was opened in 2016 with the customer’s inherited securities as the only collateral. The customer was married at the time and under Texas law, property acquired during a marriage by only one spouse through an inheritance is classified as separate property and not subject to division during a divorce.
The customer was unaware of the risks of using her inherited assets as collateral, as the line of credit was a joint line with her and her husband. BBVA employees Schkudd, Pena, and Rascon did not advise or inform the client of the legal impact of using the inherited securities as collateral for the line of credit and also failed to implement risk-management or hedging strategies to protect against market declines.
The securities used as collateral for the line of credit were 100% concentrated in equities and were exposed to substantial declines of the S&P 500, NASDAQ and/or equity markets. As the securities were collateral for a line of credit that reached over $1.4 million, BBVA and its representatives failed to protect the value of the assets.
When the equity markets declined, the customer sustained significant losses and was not informed by the representatives on the changing market conditions. As a wealth management client, the financial professionals breached their fiduciary duties by failing to contact the customer and advise her on ways to protect her inheritance.
When the client and her ex-husband divorced, she learned how the unsuitable recommendation to pledge her inherited assets as collateral exposed her inheritance. The customer’s ex-husband stated to the court that he had limited assets and that the line of credit was her responsibility.
The marital home was sold, and its funds were used to help pay down the line of credit, however, the only remaining assets were the customer’s inherited securities. At no time should the inherited securities have been pledged as a line of credit. KlaymanToskes believes a conventional mortgage should have been used to purchase the house.
Following her divorce, the customer transferred her assets to PNC and advisor James Guadion, who further failed to implement any risk management strategies on the accounts to protect against a decline in the equity markets. PNC and Guadion failed to conduct meetings with the customer to address the portfolio and the impact of changing market conditions.
The accounts remained concentrated in equities and continued to serve as collateral for a line of credit at PNC Bank. Because the line of credit was a joint line, the customer was required to cover the full loan balance. Today, the accounts continue to be 100% invested in equities which serve as collateral for a line of credit of approximately $370,000. As a result of the financial representatives’ misconduct and failure to implement any risk management strategies, the customer has sustained substantial damages. The customer is seeking up to $5 million in investment loss recovery.
Current and former customers of BBVA Securities and PNC Investments who suffered investment losses in excess of $100,000 are encouraged to contact attorney Lawrence L. Klayman, Esq. at (888) 997-9956 or lklayman@klaymantoskes.com for a free and confidential consultation to discuss legal options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com