Published on:

Girard Securities Subject of Massive SEC Audit Focusing on Branch Office Supervision

Girard Securities, Inc. (Girard Securities) is the subject of a massive audit by the U.S. Securities and Exchange Commission (SEC). The primary focus of the audit will be on the supervision of the registered representatives and financial advisors in its branch offices. With over 230 producing registered reps and financial advisors, the big question is, How will Girard Securities fare under the microscope of the SEC?

Girard Securities has been acquired by RCS Capital Corp., an acquisition awaiting the approval of the Financial Industry Regulatory Authority (FINRA). Approval is expected at the end of February, according to a memo from Girard Securities’ Chairperson and Chief Executive, Susie Woltman Tietjen. RCS Capital Corp.’s purchase of Girard Securities, plus its August 2014 purchase of VSR Financial, with its 264 registered representatives and financial advisors, means that RCS Capital Corp. will have nearly 9,700 registered reps and advisors! It appears that the SEC is right on target with its audit priority of branch office supervision!

Independent broker-dealers are notorious for their lax supervisory practices. The business model of these franchise operations is to open as many offices as possible around the country without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives generally are not employees of the broker-dealer and therefore not controlled in the same manner as other brokerage firms.

The typical supervisory organization of independent broker-dealers is to have an outside, independent contractor operate a small 1 – 2 person office and have Offices of Supervisory Jurisdiction (OSJs) monitor the registered representatives from geographically remote offices and then report back to the main compliance office at national headquarters. The supervisors at the OSJs are generally not devoted full-time supervisors, and cannot and do not supervise the day-to-day operations of the registered representatives of these independent broker-dealers.

In order to protect investors, FINRA rules require brokerage firms to establish and implement a reasonable supervisory system. The implementation of these rules requires supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker dealers and their supervisors do not establish and practice these protective supervisory measures, they can be held liable to investors for losses. As a result, investors who have suffered losses stemming from a financial advisor or registered representative’s misconduct can bring forth claims to recover damages against brokerage firms like Girard Securities, which have a duty to supervise its employees in order to prevent unnecessary investor losses.

Have you suffered losses in your Girard Securities brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Robert W. Pearce is actively investigating and accepting clients with valid claims against Girard Securities and other stockbrokers who engaged in broker misconduct and caused investment losses.

The most important of investors’ rights is the right to be informed! For over , Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.