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FINRA Highlights Risks of Investing Home Equity Loan Proceeds

Posted on February 25th, 2025 at 11:20 AM
FINRA Highlights Risks of Investing Home Equity Loan Proceeds

From the desk of Jim Eccleston at Ä¢¹½´«Ã½

FINRA issued a reminder to financial advisors to carefully consider customers’ time horizons and risk tolerance, particularly when recommending investments using funds from a home equity loan, as reported by AdvisorHub

This guidance follows a settlement involving Mary C. Beslagic, a former Edward Jones advisor, who agreed to a $5,000 fine and a two-month suspension. In the Acceptance, Waiver, and Consent (“AWC”), FINRA alleged that Beslagic improperly recommended that a married couple invest $220,000 from a home equity loan into long-term mutual funds, despite knowing that the clients planned to use the funds soon to buy a house for a family member and renovate their own home. 

Shortly after the investments were made in March 2022, the mutual funds declined in value, forcing the couple to sell part of their holdings at a loss. They also took out a $25,000 margin loan to complete their projects, according to the FINRA AWC. 

FINRA determined that Beslagic violated the SEC’s Regulation Best Interest Rule by failing to align her investment recommendations with the clients’ time horizon and liquidity needs. This violation also constituted a breach of FINRA Rule 2010, which requires advisors to maintain high standards of commercial honor.  

 

Ä¢¹½´«Ã½ LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

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