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FINRA Interested In Disciplining, Not Punishing

FINRA emphasized that the regulatory authority's first goal is the "blocking and tackling" of enforcing its rules, not collecting massive financial penalties, stated Russell Ryan, FINRA Senior Vice President and Deputy Chief of Enforcement, at the Securities Docket Securities Enforcement Forum in Washington. FINRA does levy some hefty fines every once in a while, but the majority of its enforcement efforts are focused on situations involving investor rip-offs. "It's a lot of cases that don't involve fraud, that don't involve a lot of big dollars," said Ryan. "Someone's got to enforce these rule violations. That's a space we're very good at." FINRA targets supervisory lapses, sales of unsuitable complex products - notably those aimed at elderly investors - and brokers engaging in outside business activities and "selling away" from the firm's list of products. The authority does not involve itself in areas handled by government agencies: “We're there really to discipline,” said Ryan. “We're not in the business of law enforcement [...]

By |November 5th, 2015|FINRA, Press Releases & News|
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Five More Firms To Pay $18M For Overcharges

FINRA has ordered five broker-dealers to reimburse clients a sum of $18.4 million for charging them improper fees on mutual funds. Edward Jones will pay $13.5 million, Stifel Nicolaus & Co., $2.9 million, Janney Montgomery Scott, $1.2 million, Axa Advisors, $600,000, and Stephens Inc., $150,000. FINRA found that as far back as July 2009 the mutual funds these firms made available through their retail platforms failed to offer charities and retirement accounts waivers that they were due for some upfront sales charges on Class A shares. Other times, the firms placed investors into incorrect share classes, which subjected them to charges they should not have been assessed. Earlier this year, Wells Fargo Advisors, Raymond James, and LPL Financial were forced to pay a total of $30 million for similar violations. “These actions are further evidence of our commitment to pursue substantial restitution for adversely affected mutual fund investors who were not afforded the full benefit of available sales charge waivers,” said [...]

By |October 28th, 2015|FINRA, Press Releases & News|
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FINRA Fines Twelve Firms A Combined $6.7M

FINRA ordered twelve firms to pay restitution over $4 million and fines over $2.6 million for failing to apply sales charge discounts to customers' purchases of Unit Investment Trusts ("UITs") and relevant supervisory failures. The firms sanctioned include First Allied Securities, Inc. of San Diego, CA; Fifth Third Securities, Inc. of Cincinnati, OH; Securities America, Inc. of La Vista, NE; Cetera Advisors LLC of Denver, CO; Park Avenue Securities LLC of New York, NY; Commonwealth Financial Network of Waltham, MA; MetLife Securities, Inc. of New York, NY; Comerica Securities of Detroit, MI; Cetera Advisor Networks LLC of El Segundo, CA; Ameritas Investment Corp. of Lincoln, NE; Infinex Investments, Inc. of Meridian, CT; and The Huntington Investment Company of Columbus, OH. FINRA's Executive Vice President and Chief of Enforcement, Brad Bennett, stated, "Firms need to ensure that their registered representatives are providing customers the sales charge discounts to which they are entitled. The firms sanctioned today failed to provide these discounts, resulting in [...]

By |October 20th, 2015|FINRA, Press Releases & News|
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FINRA Fines Six IBDs For Failing To Discount Large REIT Sales

Voya Financial Advisors Inc., Transamerica Financial Advisors Inc. and four other independent broker-dealers failed to give clients appropriate discounts on large sales of nontraded real estate investment trusts and business development companies. In turn, FINRA fined the six over $500,000 combined. The fines comes as part of FINRA's crackdown on firms not properly giving their customers particular discounts, called breakpoint discounts. Discounts are available on sales of particular nontraded REITs, usually when the sale is for more than $500,000. According to a number of prospectuses for nontraded REITs, the price of a REIT is normally ten dollars per share with a seventy cent commission to the broker, but for sales between $501,000 and $1 million, the price can drop to $9.90 per share with the commission falling to sixty cents. The six firms “failed to identify and apply volume discounts to certain customers' eligible purchases of non-traded REITs and BDCs, resulting in customers paying excessive sales charges,” according to the FINRA [...]

By |October 15th, 2015|FINRA, Press Releases & News|
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