August 10, 2022 – An AWC was issued in which Donahue (CRD #1206346) was fined $2,500, suspended from association with any FINRA member in all capacities for 30 days, and required to attend and satisfactorily complete 10 hours of continuing education concerning FINRA’s suitability rule. Restitution is not ordered against Donahue because the customers have settled an arbitration pertaining to his unsuitable recommendation. Without admitting or denying the findings, Donahue consented to the sanctions and to the entry of findings that he recommended that his customers invest an unsuitably high percentage of their account into a single energy-sector security. The findings stated that Donahue recommended that the customers, a retired couple in their sixties, invest 90 percent of their investments at his member firm into a single, non-diversified mutual fund. That recommendation was not consistent with the customers’ investment profiles because the fund in question invested substantially all of its assets in companies in the energy sector and Donahue’s recommendation therefore subjected the customers to substantial risk of loss. Four years after Donahue’s initial recommendation, the mutual fund’s value decreased by more than 50 percent. After transferring their accounts to a different broker-dealer, the customers sold their investments in the fund in question and realized a substantial loss.
The suspension was in effect from September 6, 2022, through October 5, 2022. (FINRA Case #2020068544901)