November 18, 2020
Former General Securities Representative Cynthia Diane Cowden recently submitted a Letter of Acceptance, Waiver, and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) Department of Enforcement to resolve allegations of recommending unsuitable high risk, speculative investments to three senior customers.
At the time, Cowden was associated with NPB Financial Group, LLC in Lake Isabella, California. She was associated with NPB from January 2013 until August 2020 when her association with the firm and registration with FINRA was terminated.
Between August 2016 and December 2017, Cowden allegedly recommended high risk, speculative investments to three senior NPB customers that were unsuitable for their investment strategies.
For one retired couple, Cowden recommended two purchases totaling $231,000 in NorthStar Real Estate Income Trust, an illiquid, high risk, non-traded REIT. Not only was this recommendation unsuitable given the couple’s investment objectives of a stable, balanced portfolio, but the investments comprised over 20% of their net worth. This investment also exceeded NorthStar’s 10% net worth concentration limit for California investors.
The third customer had a net worth of approximately $400,000, a liquid net worth of $300,000, and an annual income of $60,000. The customer’s investment objectives included slow growth and a reasonable rate of return. The customer also had a low to moderate risk tolerance and wanted liquidity. During this time period, Cowden recommended that this customer purchase $250,000 of Priority Income Fund, Inc., a closed-ended mutual fund. Aside from this fund being speculative and high-risk, the recommendation unsuitably concentrated over 50% of the customer’s net worth in this single investment.
Based on the foregoing, Cowden violated FINRA Rules 2111 and 2010. Without admitting or denying the allegations made against her, Cowden consented to a bar from associating with any FINRA member firm in any capacity.
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