FINRA Fines Financial Advisory Firm After Elderly Client Was Loaded Up on Margin

Posted on September 27th, 2022 at 1:04 PM
FINRA Fines Financial Advisory Firm After Elderly Client Was Loaded Up on Margin

From the Desk of Jim Eccleston at Eccleston Law.

The Financial Industry Regulatory Authority (FINRA) has agreed to an $86,000 settlement with SagePoint Financial over allegations that the firm failed to effectively supervise its advisors’ use of margin in client accounts.

The settlement includes nearly $52,000 in restitution to two clients who were permitted to leverage their portfolio even though they were ineligible for margin loans pursuant to firm policy, according to FINRA. FINRA alleged that SagePoint compliance officials failed to further investigate red flags indicating that the margin lending was unsuitable for the clients. The margin loans, which enables a client to use their portfolio as collateral to purchase more securities, normally exposes the client to increased costs and heightened volatility.

According to FINRA, in one case, a 79-year-old widow with $35,000 in annual income and a “moderate” risk tolerance was permitted to take out a margin loan even though company policy restricts granting margin loans to clients over 70 with income below their annual expenses. In another instance, a 56-year-old with a “moderate” risk tolerance was allowed to leverage 20-46% of the portfolio even though the client was ineligible pursuant to firm policy, according to FINRA. SagePoint consented to the fine without admitting or denying any of FINRA’s investigatory findings, according to FINRA.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, finra

Return to Archive

TESTIMONIALS

Previous
Next

I am grateful to have found an outstanding law firm that specializes in securities matters. My lawyers were extremely knowledgeable, diligent, and are skilled litigators. No stone was left upturned. As a result of their experience and tenacity, the arbitration proceeding was dismissed in my favor.

Michael E.

LATEST NEWS AND ARTICLES

September 16, 2025
Former Morgan Stanley Advisors Win Partial Court Victory in Client Solicitation Dispute

Two former Morgan Stanley advisors in Hackensack, New Jersey have defeated Morgan Stanley’s initial effort to block them from soliciting clients, according to an August 15 order from New Jersey Superior Court.

September 15, 2025
California Young-Gun Investor Charged in Alleged $6 Million Ponzi Scheme

Federal prosecutors have accused Mihir Deepak Sukthankar, a California resident once celebrated as a teenage trading “prodigy,” of orchestrating a multi-million-dollar Ponzi scheme.

September 12, 2025
LPL Broker Fined and Suspended for Recommending Risky Investments to Elderly Client

An LPL Financial broker in Elizabethtown, Kentucky, has agreed to sanctions after FINRA found he violated Regulation Best Interest (Reg BI) when recommending unsuitable investments to an elderly customer.