NYLife Securities submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which they allegedly failed to enforce its written supervisory procedures in violation of NASD Rule 3010(b) and FINRA Rule 3110(b), and consequently FINRA Rule 2010.
NYLife Securities is a retail broker-dealer that has been a member of FINRA since 1970. According to the findings, NYLife failed to enforce it procedures for supervising the suitability of sales of higher risk mutual funds that were subject to volatility. According to those procedures, the firms representatives were required to reallocate or change risk tolerances and investment objectives for portfolios that were over-concentrated in higher risk securities. However, FINRA alleged that the firm did not seek the customers input to adjust the risk tolerances and investment objectives to accommodate sales of higher-risk mutual funds due partly to the workload of the reviewers and their supervisor, which prevented them from reasonably investigating each alert that Respondent’s automated surveillance generated. The findings stated that the adjustments permitted numerous customers to be over-concentrated in their portfolios, sustaining losses of $1.4 million.
NASD Rule 3010(b) (for conduct before December 1, 2014) and FINRA Rule 3110(b) (for conduct on and after December 1, 2014) require each member firm to establish, maintain, and enforce written procedures to supervise the types of business in which it engages and the activities of its associated persons that are reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules.
Without admitting or denying FINRA’s findings, NYLife was censured, fined $250,000, ordered to pay $76,643, in restitution to customers, ordered to offer rescission to customers totaling $250,000 and ordered to certify in writing that it has reviewed its systems for enforcing its written procedures in compliance with FINRA Rule 3110.
Stockbrokers have been known to engage in many practices that may violate industry and firm rules, practices, and procedures. In order to protect investors from stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system. The implementation of these industry rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures. If broker-dealers and/or their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages which flow from the broker’s misconduct. Therefore, investors who have suffered losses stemming from their firms failure to supervise, and/or other misconduct can file claims to recover damages against broker-dealers, like NYLife Securities, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your NYLife Securities account due to their failure to supervise? 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 NYLife Securities.
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 40 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 email@example.com for answers to any of your questions about this blog post and/or any related matter.