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Charles Henry Frieda – Anaheim, California

An AWC was issued in which Frieda was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Frieda consented to the sanction and to the entry of findings that he recommended an investment strategy that was unsuitable for certain retail customers by recommending an over-concentration in energy-sector securities, some of which were speculative, resulting in significant customer losses. The findings stated that due to the speculative nature of the recommended securities, the volatility of the energy market and the high level of concentration, this strategy exposed customers to significant potential losses. In many instances, Frieda failed to properly consider and failed to obtain accurate customer investment profile information to determine the suitability of his over-concentration strategy and the securities he recommended as part of that strategy. In this regard, Frieda recommended the strategy to customers without proper consideration of each customer’s individual investment experience, risk tolerance, investment time horizon, net worth, liquidity needs and income. Consequently, Frieda did not properly assess the significant potential risks associated with his recommended strategy for each of these customers. In certain instances, the potential risks were compounded because the over-concentration in speculative energy-sector securities exceeded 50 percent of the customer’s net worth (exclusive of personal residence). In 2015, when the energy market began a downturn, Frieda unsuitably recommended that certain of his over-concentrated customers adhere to his strategy without regard to their particular situations or ability to continue to sustain losses. By following Frieda’s recommendation, the customers suffered millions of dollars in aggregate losses. (FINRA Case #2015045713302)