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Trident Partners Fined by FINRA for Failure to Supervise Steepener Sales

Trident Partners Ltd. has submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which it has been censured and fined $50,000 by the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales and suitability of steepeners, a complex, structured product.

Trident Partners, headquartered in Woodbury, New York, was found by FINRA to have failed to establish, maintain, and enforce a supervisory system to ensure that recommendations for its sale of steepeners were suitable.  Steepeners are complex, structured products that are typically longer-term notes and certificates of deposit with maturities spanning from 10-30 years.  They are typically callable by the issuers after a short, pre-specified time.  They pay higher interest rates, but if the steepener is not called after a year, the rates can drop to as low as zero, earning no returns for the remainder of the term.  FINRA found that during the relevant period, steepeners were a significant part of Trident Partners’ business, with approximately 1,600 transactions and accounting for at least 10% of commissions generated. 

According to FINRA, Trident Partners’ supervisory system was unreasonable for the following reasons:  (1) there were no written supervisory procedures (WSPs) specific to steepeners;  (2) Trident Partners failed to have a system in place to conduct due diligence and evaluate the steepeners it intended to sell;  (3)  Trident Partners failed to provide its representatives the training or guidance needed to determine the risks and suitability of these complex products; (4) Trident Partners failed to use a supervisory system to monitor for suitability and over-concentration of these products in customer accounts.  Without admitting or denying FINRA’s findings, Trident Partners was censured and fined $50,000.

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 Trident Partners, which have a duty to supervise employees in order to protect their customers’ interests.

Have you suffered losses in your Trident Partners account due to your stockbroker’s unsuitable recommendations?  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 Trident Partners 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.