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Investment Advisors and Advisory Firms Facing Disciplinary Action from FINRA

June 9, 2017 Blog

Each month, the Financial Industry Regulatory Authority (FINRA) publishes a report of disciplinary actions taken against brokerage firms and investment advisors. You can find reports dating back to 1996 on FINRA’s website: Monthly and Quarterly Disciplinary Actions. Here is a summary of some of the most-noteworthy actions from FINRA’s report for June 2017:

New York Brokerage Firm Fined for Charging Excessive Commissions

A New York brokerage firm consented to a $20,000 fine and an additional $17,425 in restitution for charging excessive commissions. According to the report, the firm charged 236 customers commissions in excess of five percent and/or its $100 minimum transaction charge. The firm also consented to findings that it, “failed to establish and maintain a system to reasonably supervise and monitor customer accounts for manipulative trading activity, such as potential market manipulation,” and that its, “supervisory system to ensure compliance with anti-money laundering (AML) policies and procedures,” was deficient.

Atlanta Firm Fined $200,000 Following Sale of Unapproved Products and Coverup of Losses from Speculative Trading

FINRA fined Atlanta-based FSC Securities Corporation $200,000 after the firm consented to findings that one of its representatives sold $1.6 million in memberships in an unapproved investment fund which, “ultimately lost millions of dollars through speculative trading and other investments.” The fund subsequently sought to conceal the loses by creating false account statements reflecting, “fictitious assets and investment returns.” The report indicates that FSC Securities Corporation lacked the supervisory controls necessary to prevent the unapproved sales and identify suspicious transfers from its customers’ accounts.

SG Americas Securities, LLC Fined $100,000 for Failure to Provide Account Statements to Customers

New York-based brokerage form SG Americas Securities, LLC (“SGAS”) consented to a $100,000 fine for failure to provide certain customers with access to their account statements, and for providing account statements in the incorrect format to others. The failures involved customers of another brokerage firm that SGAS had recently acquired, and reportedly resulted from SGAS’s lack of internal controls for monitoring the distribution of account statements from the acquired firm’s legacy computer systems.

Wells Fargo Entity Fined for Failing to Promptly Execute Trades

FINRA fined Wells Fargo Clearing Services, LLC (“WFCS”) $20,000 and ordered it to pay restitution and interest to investors for, “fail[ing] to fully and promptly execute 50 market orders in preferred securities.” The fine was also based on findings that WFCS, “failed to use reasonable diligence to ascertain the best interdealer market, and failed to buy or sell in such market so that the resultant price to its customer was as favorable as possible under prevailing market conditions.”

Have You Experienced Sudden or Unexpected Investment Losses?

If you invest with an investment advisor or brokerage firm and have experienced sudden or unexpected investment losses, you may be entitled to financial compensation through FINRA arbitration. At Zamansky LLC, we represent individual investors in arbitration matters nationwide. To speak with an investment fraud attorney at our New York law offices in confidence, please call (212) 742-1414 or request a free consultation online today.