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First Financial Equity and CCO Named in FINRA Complaint for Failure to Supervise Violations

Scottsdale, Arizona-based First Financial Equity Corporation (First Financial) and the firm’s Chief Compliance Officer (CCO), Melissa Ann Strouse, were named in a Financial Industry Regulatory Authority (FINRA) complaint alleging that the firm failed to establish and maintain a proper supervisory system with respect to the appropriateness of fee-based accounts and the monitoring of accounts for potential churning and excessive trading.  Melissa Strouse was named in FINRA’s complaint amidst allegations that as the firm’s CCO, she was responsible for ensuring the firm’s compliance with supervisory procedures.

According to the FINRA complaint, First Financial Equity had inadequate written supervisory procedures (WSPs) with respect to the appropriateness of fee-based accounts for the firm’s customers and had no system in place to address situations where excessive fees may have been charged.  Further, the Complaint alleges that First Financial failed to maintain and enforce a supervisory system related to its options business and that the firm allegedly had no WSPs for the supervision, approval and sale of exchange-traded funds (ETFs).  For her part, the Complaint alleges that Melissa Strouse failed to ensure that the WSPs covered all required areas and were amended as needed.

Stockbrokers, registered representatives, and other financial industry professionals have been known to engage in many types of fraudulent and unlawful behavior which are in violation of industry rules and procedures.  In order to protect customers from broker misconduct, FINRA rules require brokerage firms to establish and implement a reasonable supervisory system.  The implementation of the rules requires supervisors to monitor its employees to ensure compliance 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 fail to establish and implement these protective measures, they may be held liable to account holders for losses flowing from the employees’ misconduct.  As a result, account holders who have suffered losses stemming from a broker’s unsuitable recommendations, omissions and/or fraudulent misconduct can bring forth claims to recover damages against broker-dealers like First Financial Equity Corp., which have a duty to supervise its employees in order to prevent these types of misconduct.

Have you suffered losses in your First Financial Equity investment account due to your registered representative or stockbroker’s misconduct?  If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.  Mr. Pearce is accepting clients with valid claims against First Financial Equity financial professionals for unsuitable recommendations, excessive fees and/or trading, and other types of stockbroker misconduct.

The most important of investors’ rights is the right to be informed!  This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida.  For over 35 years, 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 post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.