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Biggest FINRA Penalties In 2015

The biggest penalties FINRA levied last came from a wide variety of violations: Puerto Rico The Puerto Rico bond crisis was the source of a couple substantial FINRA actions. The regulator fined UBS Financial Services Inc. of Puerto Rico $7.5 million and ordered restitution of $11 million to 165 customers who had bought Puerto Rican closed-end fund shares. In a similar action, the regulator made Santander Securities pay $4.3 million in restitution and levied a $2 million fine. Mutual Fund Charges Overcharging for mutual funds was at the center of numerous big FINRA cases. The regulator ordered Wells Fargo Advisors to pay $15 million in restitution to customers because it failed to waive mutual fund sales charges for charitable and retirement accounts. In similar actions, Edward D. Jones & Co. paid $13.5 million in restitution, while Raymond James Financial Services Inc., LPL Financial, Stifel Nicolaus & Company Inc. and Janney Montgomery Scott paid $8.7 million, $6.3 million, $2.9 million and $1.2 million, [...]

By |January 11th, 2016|FINRA, Press Releases & News|
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Massachusetts Regulator Charges Securities Firm With Unsuitable Sale To Elderly Client

William Galvin, secretary of the commonwealth of Massachusetts, has charged a securities firm operating at Citizens Bank locations with "dishonest and unethical conduct" for selling an elderly woman funds that were riskier than her stated investment tolerance. Galvin seeks restitution from Citizens Securities for the anonymous investor, who lost roughly $7,000 when she got out of the investment portfolio. Despite indicating a low tolerance for the risk, the investor was allegedly sold aggressive investment strategies, including alternative and emerging market funds, as well as funds that buy high-yield bonds. The Citizens Bank branch where she first met the financial consultant failed to adequately disclose the location's brokerage activities and did not identify who the consultant worked for, leaving the impression that he worked for the bank. "Banks that offer non-bank financial services have an obligation to make clear the distinction between the banking services and the other financial services provided at the same location," Galvin said. "This is particularly important [...]

By |January 8th, 2016|Press Releases & News|
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FINRA Intends To Probe Brokerages’ Compliance Culture

FINRA intends to investigate whether complying with rules is part of brokerage firms' culture during its examinations this year. The regulatory authority announced on Tuesday that it will more formally scrutinize how firm culture affects compliance and risk management practices. “A firm's culture is both an input to and product of its supervisory system, including its approaches to identifying and managing conflicts of interest and ensuring the ethical treatment of customers,” FINRA said. “This means that firms should take visible actions that help mitigate conflicts of interest and promote the fair and ethical treatment of customers.” Other focus areas for FINRA exams include the management of conflicts of interest in the sale of proprietary products and products the firm is paid to sell, technology, anti-money laundering and firm liquidity. Among the cultural aspects FINRA will investigate are whether compliance is valued at the firm and violations are not tolerated, whether the firm aggressively targets potential compliance problems, whether senior management serves as good role [...]

By |January 5th, 2016|FINRA, Press Releases & News, SEC|
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FINRA Fines Barclays Capital $13.75M

FINRA ordered Barclays Capital, Inc. to pay over $10 million in restitution, including interest, to affected customers for mutual fund-related suitability violations. These suitability violations relate to an array of mutual fund transactions including mutual fund switches. Further, the firm failed to provide applicable breakpoint discounts to particular customers and was censured and fined $3.75 million. Broker-dealers have an obligation to ensure that any recommendation to switch mutual funds be evaluated with regard to the net investment advantage to the investor. FINRA noted that “switching among certain fund types may be difficult to justify if the financial gain or investment objective to be achieved by the switch is undermined by the transaction fees associated with the switch.” FINRA found that from January 2010 through June 2015, Barclays’ supervisory systems were insufficient to prevent unsuitable switching or to meet certain of the firm’s obligations regarding the sale of mutual funds to retail brokerage customers. In particular, the firm incorrectly defined a [...]

By |December 29th, 2015|FINRA, Press Releases & News|
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