The 10 Biggest Brokerage Industry Regulatory Fines in 2014
FINRA handed out some hefty fines to financial firms in 2014. Below are 10 of the biggest fines handed out this year, presented in order of the amount of the fine.
No. 10: WFG Investments fined for $700,000
Reason for Fine: Failing to commit the time, attention and resources to a range of critical obligations in its supervision of registered reps.
No.9: Berthel Fisher & Co. Financial Services Inc. fined for $775,000
Reason for Fine: Failure to supervise the sale of alternative investments such as non-traded REITs and leveraged and inverse ETFs.
No.8: LPL Financial fined for $950,000
Reason for Fine: Supervisory deficiencies related to sales of nontraded REITs, oil and gas partnerships, business development companies, hedge funds, managed futures and other illiquid investments.
No.7: Stifel Nicolaus & Co. and its subsidiary, Century Securities Inc. fined for $1 million
Reason for Fine: Selling leveraged and inverse ETFs to customers for whom the investments were unsuitable, and not having proper training or written procedures in place to make sure their advisers had an “adequate and reasonable basis” for recommending the products.
No.6: Morgan Stanley fined for $1 million
Reason for Fine: Paying approximately $100 million in commissions to approximately 780 unregistered, retired brokers without properly ensuring they were no longer soliciting or advising.
No.5: Two independent broker-dealers owned by Ladenburg Thalmann Financial Services Inc. fined for $1.275 million
Reason for Fine: Failure to supervise hundreds of brokers who created and sent false and inaccurate consolidated account statements to clients.
No.4: Wells Fargo fined for $1.5 million
Reason for Fine: Failing to properly vet some 220,000 new customer accounts by doing the necessary identity verification to comply with anti-money laundering requirements.
No.3 Bank of America Merrill Lynch fined for $8 million
Reason for Fine: Failing to waive mutual fund sales charges for certain charities and retirement accounts.
No.2: Citigroup Inc. fined for $15 million
Reason for Fine: Not adequately protecting against “potential selective dissemination of non-public research to clients and sales and trading staff.”
No.1: J.S. Oliver Capital Management fined for $15 million
Reason for Fine: Breach of fiduciary duty and violations of securities laws via an alleged cherry-picking scheme that defrauded several clients out of about $10.9 million.
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