Osaic Services Fined $250,000 for Supervisory Failures in Options Trading
From the desk of Jim Eccleston at Eccleston Law
Osaic Services, formerly SagePoint Financial, recently agreed to pay a $250,000 fine and accept censure for failures in supervising excessive and unsuitable options trading from June 2018 to August 2019.
According to a FINRA settlement letter, known as an Acceptance, Waiver, and Consent (“AWC”), SagePoint permitted advisors without adequate training in options trading to override automated alerts, allowing unsuitable trades that led to significant customer losses.
AdvisorHub reports that one advisor’s inadequate supervision resulted in two clients incurring over $1.2 million in losses and paying $60,000 in commissions. In one instance, the advisor opened a high-risk options position for a client who lacked a margin account, exposing her to potential losses exceeding $4.5 million, far beyond her $200,000 liquid net worth.
FINRA found additional red flags tied to unauthorized trades in the account of a 91-year-old client who had passed away. Despite notification of her death, SagePoint allowed the advisor to execute 21 trades in the deceased’s account, generating $10,000 in commissions and leaving her heirs with losses.
AdvisorHub reports that this recent fine follows a similar AWC agreed in 2022 when Osaic paid $35,000 for failing to establish adequate supervisory systems to address suitability concerns related to margin use and investment recommendations.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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