Two veteran retail financial advisors in Texas this month hit the skids in the wake of allegations that they misappropriated or stole client funds.
FINRA on Thursday barred a former Raymond James Financial Services Inc. advisor based in San Antonio, Jose Gamez, who did not provide information into FINRA’s investigation into whether Gamez used customer funds for personal reasons.
And the Texas State Securities Board on October 9 filed an order against Ronald D. Smith Jr. and his eponymous registered investment advisor in Austin, claiming he misappropriated $1.4 million from 10 clients. Texas revoked his license to work as an advisor, according to the order.
Gamez started his career in the securities industry in 2000, while Smith began in 1994, according to their FINRA and Securities and Exchange Commission work histories.
A Raymond James spokesperson declined to comment about Gamez. A call to Smith Wealth Advisors on Friday afternoon could not be completed.
High-risk brokers tend to cluster in the warmer climes of the Southeast and Southwest, according to a new research paper, titled “Regulatory leakage among financial advisors: Evidence from FINRA regulation of 'bad' brokers,” published in the Journal of Financial Economics.
Texas had the tenth highest percentage of riskiest brokers, based on an analysis of 2018 data; such brokers were defined as carrying two or more “specified risk events” or one or more final criminal matters.
Raymond James Financial Services in June “discharged,” meaning fired, Gamaz, alleging that he used client funds for personal reasons, according to his BrokerCheck profile. Two months later, the firm settled an investor complaint involving the broker for more than $413,000.
Meanwhile, from at least March 2017 through June 2024, Smith and his form “would have clients issue a check or transfer funds to him or [the firm’s] personal or business accounts and it was the clients' understanding that the funds would be invested pursuant to the terms as described in the clients' investment advisory contracts,” according to a summary of the Texas claims on Smith’s BrokerCheck profile.
He did not invest the clients' funds, and his uses of client funds to make payments to other clients and for personal and business purposes constitute fraudulent business practices, according to BrokerCheck.
Also, from around April 2022 through April 2024, Smith and his firm overcharged at least 21 clients in portfolio management services fees totaling approximately $316,000, according to BrokerCheck.
Smith and his firm’s “failures to inform his clients that the clients' funds would be used for non-investment purposes were intentional failures to disclose material facts and constitute fraud,” according to BrokerCheck.
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