FINRA News - Law Offices of Robert Wayne Pearce

May 11, 2016

FINRA Slams MetLife with $25 Million Fine for Misrepresenting Variable Annuities

The Financial Industry Regulatory Authority (FINRA) slammed MetLife Securities, Inc. (MetLife) with a $25 million fine for negligent misrepresentations and omissions to customers regarding the costs and guarantees relating to variable annuities. MetLife agreed to the fine, which includes a $20 million fine and $5 million to be paid to customers, without admitting or denying FINRA’s findings. From approximately 2009 to 2014, FINRA found that MetLife falsely told customers that new variable annuities were less costly than the annuities they were replacing. Further, MetLife made the replacement annuities appear more beneficial to the customer when they were typically more expensive. According to FINRA, MetLife sold at least 43 billion in variable annuities which generated $152 million in gross dealer commissions for the firm. Nonetheless, MetLife failed to supervise its registered representatives to ensure they were property trained and informed of the comparative analysis between the variable annuities and the recommended replacement annuities. In fact, FINRA found that MetLife principals approved 99.79% of the variable annuity replacements, even though three-quarters (3/4) of the replacement applications contained at least one misrepresentation or omission.

Dec 16, 2015

Lincoln Financial Advisors Fined for Supervisory System Failures

Lincoln Financial Advisors Corporation (LFA) of Fort Wayne, Indiana submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to implement and enforce reasonable supervisory procedures related to the recommendation of private placement variable annuities (PPVA). LFA has been a FINRA member since 1969 and has nearly 2,500 registered representatives and over 500 branch offices. FINRA found that between October 2008 and April 2009, representatives from two of LFA’s branch offices recommended customers to invest in a hedge fund that engaged in a complex option trading strategy. FINRA alleged that the complexity of the hedge fund exposed the LFA clients to a high degree of financial risk. LFA however approved the recommendations and 25 firm customers invested approximately $11.7 million in the hedge fund. In 2010, the hedge fund was shut down.

Oct 23, 2015

12 More Independent Broker Dealers Fined by FINRA for Failing to Give UIT Discounts to Investors

The Financial Industry Regulatory Authority (FINRA) fined a dozen independent broker-dealers (IBDs) for failing to give their clients the proper discounts available to them, known as breakpoint discounts, on sales of unit investment trusts (UITs). They were also cited for related supervisory failures. Some of the biggest fines were levied against First Allied Securities Inc. (First Allied), Fifth Third Securities Inc. (Fifth Third), Securities America Inc. (Securities America), Cetera Advisors LLC (Cetera Advisors), and Park Avenue Securities LLC (Park Avenue). FINRA ordered the 12 firms to pay both fines and restitution totaling $6.7 million. The other firms sanctioned were: Commonwealth Financial Network (Commonwealth Financial), MetLife Securities Inc. (MetLife), Comerica Securities (Comerica), Cetera Advisor Networks LLC, Ameritas Investment Corp. (Ameritas), Infinex Investments Inc. (Infinex), and The Huntington Investment Company (Huntington Investment).

Oct 19, 2015

Six Independent Broker Dealers Fined by FINRA for Failing to Give REIT Discounts to Investors

The Financial Industry Regulatory Authority (FINRA) fined six independent broker dealers for failing to give their clients the proper discounts available to them, known as breakpoint discounts, on large sales of certain nontraded REITs. The six firms are Voya Financial Advisors Inc. (Voya), Transamerica Financial Advisors Inc. (Transamerica), Investacorp Inc. (Investacorp), J.P. Turner & Co. (J.P. Turner), National Planning Corp. (National Planning), and Cetera Investment Services (Cetera). The fines were levied in July and August and total more than $500,000. Voya and Transamerica were fined the largest amounts: $325,000 for Voya and $85,000 for Transamerica. The other fines levied against Investacorp, J.P. Turner, National Planning, and Cetera were: $50,000, $45,000, $30,000, and $30,000, respectively. All six firms were also ordered to pay restitution.

Sep 17, 2015

The Law Offices of Robert Wayne Pearce P.A. Wins $600,000 Plus Interest Award Against UBS Puerto Rico

In an arbitration proceeding against UBS Financial Services, Inc. of Puerto Rico (UBS-PR), the Law Offices of Robert Wayne Pearce, P. A. won a $600,000 plus interest award for one of the firm’s clients this week. The case arose out of the alleged misrepresentations and unsuitable recommendations by a UBS PR financial advisor to our client that he purchase and then hold an excessive concentration of UBS-PR closed-end bond funds in his investment account. UBS-PR, through its representatives, made false representations and misleading statements to our client about both the nature and risk of the closed-end bond fund and investment strategy.

Aug 17, 2015

Morgan Stanley Fined $675,000 for Failing to Address Short Positions in Tax-Exempt Municipal Bonds

Morgan Stanley & Co. and Morgan Stanley Smith Barney LLC of New York submitted a Letter of Acceptance, Waiver and Consent to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to supervise and implement adequate written procedures to comply with Municipal Securities Rulemaking Board (MSRB) rules relating to short positions in tax-exempt municipal bonds.

Aug 14, 2015

Merrion Securities of New Jersey Fined by FINRA for Violating the Exchange Act

Merrion Securities, LLC (Merrion) of Westfield, New Jersey Submitted a Letter of Acceptance, Waiver and Consent to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to properly establish an escrow account for investor funds. Organized as a Limited Liability company and FINRA member since 1992, Merrion focuses primarily on general securities transactions with approximately 117 registered representatives within one branch office.

Aug 12, 2015

Seattle, Washington Firm NSC Fined for Compensation Violations

National Securities Corporation (NSC) located in Seattle, Washington submitted a Letter of Acceptance, Waiver and Consent to the Department of Enforcement of the Financial industry Regulatory Authority (FINRA) for allegedly failing to disclose to investors compensation they were receiving. NSC has been a registered FINRA member since 1947 and provides retail brokerage, investment banking and investment advisory services.

May 26, 2015

UBS Ordered to Pay Investor $1M in Damages for Unsuitable UBS Puerto Rico Funds

UBS Wealth Management and UBS Puerto Rico have been ordered by the Financial Industry Regulatory Authority (FINRA) to pay $1 million in damages to a 66 year old investor. According to the arbitration panel, UBS brokers encouraged the investor to keep and hold 100% of his investment portfolio in risky Puerto Rico closed end bond funds despite the fact that the investment was extremely over-concentrated and completely unsuitable for him. According to the arbitration award, this conservative, frugal investor lost $737,000 of his nearly $1 million portfolio. When the investor approached UBS with his concerns about the decline in the value of his investment portfolio the UBS branch manager allegedly stated that “even a skinny cow could give milk.” The FINRA arbitration award went on to note that UBS provided the investor with brochures and monthly statements in English, despite the fact that he spoke very little English and had requested the documents be sent in Spanish. Unfortunately, this investor did not know that UBS brokers were allegedly under pressure to sell these risky closed-end bond funds and to encourage investors to hold the bonds even when their value collapsed in the fall of 2013.

May 8, 2015

LPL Financial Hit with $11.7 Million Fine for Failure to Supervise Investment Sales

LPL Financial LLC (LPL Financial) was fined $11.7 million by the Financial Industry Regulatory Authority (FINRA) for failing to maintain a proper supervisory system with respect to the sales of complex investment products, such as exchange-traded funds (ETFs), variable annuities, mutual funds, and non-traded real estate investment trusts. Without admitting or denying the findings, LPL Financial consented to FINRA’s sanctions and findings that if failed to enforce its supervisory procedures for the sales of non-traditional ETFs, such as leveraged, inverse, and inverse-leveraged ETFs. Specifically, FINRA found that LPL Financial failed to enforce allocation limits with respect to customers’ investment objectives in its sales of non-traditional ETFs. LPL also failed to ensure that some of its registered representatives were adequately trained to sell the ETFs.