American Portfolios Financial Services, Inc. (American Portfolios) submitted a letter of Acceptance, Waiver, and Consent (AWC) in which it was censured and fined $50,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise the unsuitable mutual fund switches by two of its registered representatives.
According to FINRA, American Portfolios, based out of Holbrook New York, engaged in unsuitable mutual fund switching through two of its registered representatives which resulted in its customers incurring nearly $91,000 in unnecessary sales charges. During the relevant time period, FINRA found that the two American Portfolios representatives recommended 78 unsuitable mutual fund switch transactions in 15 customer accounts.
FINRA also noted that American Portfolio failed to establish and enforce a supervisory system in order to detect and prevent the unsuitable mutual fund switching. While the firm allegedly had a switch alert in place, it failed to ensure that its supervisors investigated those alerts. Furthermore, American Portfolio’s supervising principals approved all of the mutual fund switches in spite of a number of red flags. Some of the red flags included that the many of the customers who were recommended these switches were elderly, that both of the registered representatives placed their customers into Class A mutual fund shares with substantial upfront costs to customers, and that the commissions earned by the American Portfolio representatives were very high. Without admitting or denying FINRA’s findings, the firm consented to the sanctions and has returned the unnecessarily incurred sales charges to its customers.
Stockbrokers, registered representatives, and other financial industry professionals have been known to engage in many types of misconduct which are in violation of industry rules and procedures. In order to protect customers from such misconduct, FINRA rules require broker-dealers to establish and implement a reasonable supervisory system. The implementation of these rules requires supervisors to monitor its employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for losses flowing from the employees’ misconduct. As a result, account holders who have suffered losses stemming from unsuitable recommendations, unauthorized securities transactions or other misconduct by their broker or registered representative can bring forth claims to recover damages against broker-dealers like American Portfolios Financial Services, which have a duty to supervise its employees in order to prevent broker misconduct.
Have you suffered losses in your American Portfolios Financial Services investment account due to your registered representative or stockbroker’s unsuitable recommendations or unauthorized securities transactions? 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 American Portfolios Financial Services financial professionals for unsuitable recommendations, unauthorized securities transactions, and other types of stockbroker misconduct.
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 post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.
Robert Wayne Pearce
Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $125 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.
Rate this Post
Loading...