Summit Brokerage Fined for its Failure to Supervise

Summit Brokerage submitted a Letter of Acceptance, Waiver, and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which they failed to review its representatives business and enforce supervisory procedures violating FINRA Rules 3110 and 2010.

FINRA Rule 3110(b) requires 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 the applicable FINRA rules.” FINRA Rule 3110(b)(4) requires, among other items, that firms have written procedures for the review of incoming and outgoing written (including electronic) correspondence, and that such reviews be conducted by a registered principal and evidenced in writing. Violations of FINRA Rule 3110 also are violations of FINRA Rule 2010.

Summit, based in Boca Raton, Florida, has been a FINRA member since 1994. According to FINRA, Summit failed to enforce its written supervisory procedures for review of its registered representatives incoming and outgoing correspondence relating to their securities business. The findings stated that from 2015 to 2016, Summit branches failed to assign a principal to review nearly 3,200 quarterly submissions of scanned correspondence. The findings also stated that Summit was unaware of this  until FINRA staff requested copies of correspondence as part of a routine examination. Without admitting or denying FINRA’s findings, Summit Brokerage was censured and fined $40,000.

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 brokerage firm’s failure to supervise and/or other misconduct can file claims to recover damages against broker-dealers, like Summit, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.

Have you suffered losses in your Summit Brokerage 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 Summit Brokerage.

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 pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.