Each month and again on a quarterly basis, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. This long list of alleged wrongdoing and misconduct reads a lot like a police blotter on money matters. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.
For our part, in addition to circulating the entire report to help get the word out about these alleged misdeeds, we like to pick out some of the highlights from each report. Specifically, we’re looking for schemes or abuses that might be more far-reaching than the individual cases brought through the FINRA arbitration process. In other words, we name names here because we hope to raise awareness out there about certain brokers and products that might otherwise go unnoticed except for the case appearing in the report.
As you’ll notice if you read through these blurbs, non-traditional ETFs continue to give brokerages (and aggrieved investors) serious headaches due to inadequate supervision or training of brokers regarding those products. For more on that topic, please see our post here.
Ameriprise Financial Services, Inc. and broker David Bradley Tysk of Minnesota were fined and censured by FINRA. The firm was fined $100,000. Tysk was fined $50,000 and suspended. The sanctions were based on findings that Tysk altered computer notes of customer contacts after the customer complained about the suitability of a recommendation. Tysk has appealed.
Citigroup Global Markets Inc. submitted an AWC in which the firm was censured and fined $3,000,000, to be paid jointly to FINRA and the New York Stock Exchange (NYSE). Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to deliver prospectuses in connection with sales of certain ETFs to customers.
Feltl & Company of Minnesota was censured, fined $225,000, and ordered to pay $13,678.37 in restitution to customers by FINRA. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish and maintain a supervisory system, including written procedures, that was reasonably designed to ensure that the firm’s sales of leveraged or inverse exchange-traded funds (non-traditional ETFs) complied with all applicable securities laws and NASD and FINRA rules. Furthermore, the firm failed to provide its personnel with adequate training in the appropriate use of non-traditional ETFs and did not adequately supervise and monitor non-traditional-ETF activity in customer accounts.
First American Securities, Inc. of Ohio was censured and fined $10,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish and maintain a supervisory system, including written policies and procedures, regarding the sale of leveraged, inverse and inverse-leveraged ETFs (non-traditional ETFs) that was reasonably designed to achieve compliance with applicable securities laws and regulations. The findings stated that the firm allowed its representatives to recommend and sell non-traditional ETFs to customers without any training related to non-traditional ETFs and without establishing WSPs that addressed the sale or supervision of non-traditional ETFs.
WFG Investments, Inc. of Texas was censured and fined $700,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to conduct appropriate due diligence and supervision with respect to a private placement offering that a registered representative sold away from the firm as an approved private securities transaction. All of the private placement investors, who were also firm customers, lost 100 percent of their investments resulting from a related entity’s fraudulent business practices.
Derek Lane Weaver of Pruco Securities was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Weaver consented to the sanction and to the entry of findings that he refused to provide FINRA-requested documents and information related to an investigation into allegations that he participated in a Ponzi scheme.
If you or someone you know has been the victim of investment fraud or broker misconduct, please contact our securities attorneys immediately for a free consultation toll-free at 1-855-462-3330 or via email by clicking here.