FINRA Fines Two Firms Over Mutual Fund Sales

Posted on January 4th, 2022 at 1:16 PM
FINRA Fines Two Firms Over Mutual Fund Sales

From the Desk of Jim Eccleston at Eccleston Law:

The Financial Industry Regulatory Authority (FINRA) has fined Emerson Equity $1.7 million, citing several years of faulty supervision of short-term mutual fund trades. Additionally, FINRA levied a $705,000 penalty on Triad Advisors due to lackluster supervision of sales for an alternative mutual fund, the LJM Preservation & Growth Fund, which closed in 2018. 

According to FINRA, Emerson Equity employs at least 200 advisors across fifty offices while the firm primarily markets private placements. FINRA alleged that Emerson’s CEO, Dominic Baldini, failed to design supervisory systems to oversee short-term mutual fund trades between 2015 and 2020. Implementation of supervisory systems would have allowed Emerson Equity to adhere to FINRA’s suitability rules, according to FINRA. 

Emerson Equity failed to supervise the trading activity of one unnamed advisor in particular, who generated at least $1.6 million in unnecessary fees over a five-year period. Emerson Equity and Baldini settled with FINRA without admitting or denying any of FINRA’s investigatory findings. Emerson Equity received a $60,000 fine and agreed to pay at least $1.6 million in restitution to customers. Further, Baldini was fined $5,000 and was also suspended for twenty days. 

Similarly, Triad Advisors received a fine of $195,000 and agreed to pay $510,000 in restitution to clients. 

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

Tags: eccleston, eccleston law, finra, fines

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