Robert W. Baird & Co. of Milwaukee, Wisconsin and Rolf Parker Griffith III of Nashville, Tennessee submitted a Letter of Acceptance, Waiver and Consent to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to reasonably supervise a former registered representative’s misuse of customer funds.
FINRA alleges that during the period July 1, 2013 through June 30, 2014, Robert W. Baird & Co. failed to establish, maintain and enforce a supervisory system and written supervisory procedures for correcting trade errors that was reasonably designed to ensure compliance with applicable laws, regulations and rules. FINRA claimed the brokerage firm did not provide its supervisors with any training or guidance on how to review, approve or process trade corrections in violation of NASD Conduct Rule 3010 and FINRA Rule 2010. Without admitting or denying the FINRA findings, Robert W. Baird & Co. was censured and was ordered to pay a $200,000 fine and ordered to adopt and certify to FINRA that it put in place reasonable supervisory procedures for trade corrections to prevent abuse of customers.
With respect to Mr. Griffith, FINRA charged him with failure to supervise the registered representative who used trade corrections to misuse customers’ funds. The registered representative made a trade correction that effected a transfer of stock from one customer to another customer at a price $3 per share above market price. The second customer was then subject to an immediate unrealized loss of over $34,000 six months after the trade supposedly took place. FINRA alleged the size of the unrealized loss and 6 month delay were “red flags” that should have made Mr. Griffith suspicious of the broker’s uncorroborated statements that the second customer was willing to accept that unrealized loss in his account. According to FINRA, Mr. Griffith did not even follow the procedures in place to document the trade correction and slapped the second customer with the loss in violation of firm policies. Eventually, Robert W. Baird & Co. reimbursed the second customer for the loss, and FINRA fined Mr. Griffith $5,000 and suspended him for 10 days.
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 the acts and omissions of its representatives can bring forth claims to recover damages against firms, like Robert W. Baird & Co., which have a duty to supervise employees in order to protect their customers’ interests.
Have you suffered losses in your Robert W. Baird & Co. account due to any broker 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 Robert W. Baird & Co. 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 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.