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WFG Investments Fined by FINRA for Failure to Supervise Unsuitable Trading

WFG Investments, Inc. has submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which it has been fined $150,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise its registered representative’s unsuitable trading despite numerous red flags.

WFG Investments is headquartered in Dallas, Texas and currently has approximately 237 registered representatives and 118 branch offices.  FINRA found that WFG Investments failed to appropriately supervise the sales practices of a registered representative who had engaged in unsuitable trading in his customers’ accounts by overconcentrating them in low-priced securities.  For example, FINRA found that during 2012, the WFG representative’s account purchases were 66% low-priced securities.  In 2013, FINRA’s findings state that the account purchases were 80% concentrated in these securities and/or illiquid and highly speculative private placement and REIT investments.

During the relevant time period, January 1, 2012 and June 20, 2013, FINRA stated that WFG Investments’ senior personnel were aware of red flags regarding the unsuitable trading, yet WFG consistently failed to adequately respond to the red flags that it was made aware of at two separate meetings that were attended by senior supervisory and compliance personnel.  Without admitting or denying the findings, WFG Investments was censured and fined $200,000.

FINRA rules require brokerage firms to establish and implement a reasonable supervisory system to protect customers from the risks associated with investing. The implementation of the rules requires supervisors to monitor their 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 investment losses which stem from their employees’ misconduct. Therefore, investors who have suffered losses due to a brokerage firm’s failure to supervise can bring forth claims to recover damages against firms, like WFG Investments, which have a duty to supervise employees in order to protect their customers’ interests.

Have you suffered losses in your WFG Investments account due to your stockbroker’s unsuitable trading strategy?  Did your stockbroker overconcentrate your account inappropriately?  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 WFG Investments stockbrokers who may have engaged in misconduct and caused investors losses.

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 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.