Articles Posted in Brokerage Firms In The News

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JPMorgan Chase & Co (JPMorgan) is under investigation by the Securities and Exchange Commission (SEC) about a potential conflict of interest and breach of fiduciary duty with respect to its sales of mutual funds and other proprietary products.

According to InvestmentNews, JPMorgan received subpoenas and inquiries from the SEC and other government authorities about the firm’s sale and recommendations of mutual funds and other proprietary investment products in its wealth management business. At question is the alleged breach of fiduciary duty, which requires that financial advisors put their customers’ best interests ahead of their own. Continue reading →

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LPL Financial LLC (LPL Financial) was fined $11.7 million by the Financial Industry Regulatory Authority (FINRA) for failing to maintain a proper supervisory system with respect to the sales of complex investment products, such as exchange-traded funds (ETFs), variable annuities, mutual funds, and non-traded real estate investment trusts.

Without admitting or denying the findings, LPL Financial consented to FINRA’s sanctions and findings that if failed to enforce its supervisory procedures for the sales of non-traditional ETFs, such as leveraged, inverse, and inverse-leveraged ETFs. Specifically, FINRA found that LPL Financial failed to enforce allocation limits with respect to customers’ investment objectives in its sales of non-traditional ETFs. LPL also failed to ensure that some of its registered representatives were adequately trained to sell the ETFs. Continue reading →

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A complaint filed against Calton & Associates Inc., located in Tampa, Florida, and Kenneth Harter of Roland, Arkansas alleges that they “charged customers prices that were not reasonable in municipal bond transactions.” The complaint alleges that R.M. Duncan Securities, acting through two of its representatives and, eventually, Calton & Associates and Mr. Harter, sold bonds to its customers at unfair prices. R.M. Duncan Securities representatives allegedly solicited three elderly customers to purchase a total of $215,000 par value of the bonds.

According to FINRA, the representatives told their clients the bonds “would receive an 11% tax-free yield on the bond interest payments, despite the fact that the bonds were in default and not paying full interest.” Calton & Associates and Mr. Harter allegedly solicited customers to purchase bonds that were purchased from the R.M. Duncan Securities at a price that was 60% higher than the prevailing market price. FINRA alleges that R.M. Duncan Securities and Calton & Associates worked in “concert” to make the inter-dealer appear higher than the market price to pull off their scheme. FINRA alleges the brokerage firms failed to supervise their municipal securities activities and prices and are currently under investigation. Continue reading →

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WFG Investments, Inc. of Dallas, Texas submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but it did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to conduct appropriate due diligence and supervision with respect to a private placement offering and that a registered representative sold an investment away from the firm as an approved private securities transaction.

FINRA found that in various times between March 2007 and January 2014, “the Firm failed to commit the necessary time, attention and resources to an array of critical regulatory obligations related to its supervision of registered representatives.” Clients who invested in the private placement offering allegedly lost their entire investment. FINRA also found that WFG Investments failed to supervise its representatives, who allegedly recommended the sale of high risk equity and ETF purchases for a retired client with conservative risk tolerance. In addition, WFG Investments failed to supervise a representative’s private securities transactions. According to FINRA, the WFG representative allegedly structured and sold two funds that had substantial investments (exceeding the 50% limit) without investors’ knowledge. All private placement investors allegedly “lost 100% of their investments resulting from a related entity’s fraudulent business practices.” Consequently, WFG Investments was censured and fined $700,000 by FINRA. Continue reading →

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Geoffrey Richards Securities Corp. of Hypoluxo, Florida submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it conducted securities business after the firm’s net capital fell below its minimum requirement.

FINRA member since 2002, Geoffrey Richards Securities Corp. (Geoffrey Richards) is a firm that specializes in securities. FINRA found “between June 2010 and January 2013, Geoffrey Richards acted as an underwriter in a firm commitment offerings, conducted a securities business while it was net capital deficient, failed to file to the requisite net capital deficiency notifications, filed inaccurate Financial and Operational Combined Uniform Single (FOCUS) Reports, and maintained inaccurate books and records.” Mr. Richards’ alleged involvement as underwriter in the firm commitment offering required deductions to the firm’s net capital to be made. For an eight day period, the firm’s net capital fell below its minimum requirement. For violation of several FINRA, NASD, and SEC Rules, Geoffrey Richards Securities Corp. was fined $40,000. Continue reading →

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Clearview Correspondent Services, LLC (Clearview) of Richmond, Virginia submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to report positions to the Large Options Position Reporting (LOPR) system.

According to FINRA, Clearview (now known as BB&T Securities), failed to properly aggregate positions of over 1,000 accounts that were acting in concert under the coms review periods. In addition, FINRA found that the firm failed to “establish and maintain a supervisory system that was reasonably designed to achieve compliance with the applicable securities laws and regulations, and FINRA Rules, concerning the reporting of options positions to the LOPR.” Consequently, Clearview, n/k/a BB&T, was censured and fined $1,000,000. Continue reading →

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Dawson James Securities, Inc. of Boca Raton, Florida submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it “failed to establish and implement an adequate system to determine whether a former registrant’s disclosed outside business was properly characterized as an outside business activity or whether it should be treated as an outside securities activity subject to the requirements of NASD Rule 3040.” Continue reading →

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Michael Hadden, a former broker with UBS Wealth Management (UBS), has made claims that UBS allegedly made it “impossible” for his to continue working due to “… its various unethical practices with respect to customers …” as stated in his original arbitration claim with the Financial Industry Regulatory Authority (FINRA).

Mr. Hadden has asked a federal court, the U.S. District Court for the Western District of Kentucky, to overturn FINRAs arbitration award which ordered him to repay over $300,000 in bonus money, attorneys’ fees and interest. According to Mr. Hadden’s court filings, UBS would allegedly mislabel conservative investors as moderate in order to avoid future restitution and penalties. As Mr. Hadden noted in his court documents, “… the risk reporting system is done … to protect UBS from future claims of lack of suitability from the client or FINRA.”
Continue reading →

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Citigroup Global Markets Inc., (Citigroup) submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but it did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to deliver prospectuses with respect to the sales of exchange-traded funds (ETFs) to its investor customers.

According to FINRA, Citigroup failed to deliver prospectuses for nearly 255,000 investor purchases of approximately 160 ETFs over a three-month period. Further, FINRA found that from 2009 through April 2011, Citigroup may have failed to deliver prospectuses for more than 1.5 million purchases of ETFs by investors. Moreover, Citigroup’s supervisory system failed to achieve compliance with Federal securities laws with regard to prospectus-delivery requirements, especially since the firm allegedly detected certain failures back in 2009. Continue reading →