By Robert H. Rex, Esq.
In March 2014, the Financial Industry Regulatory Authority (FINRA) sanctioned and fined Securities America $625,000 for failing to supervise use of their consolidated reporting systems which resulted in statements being sent to customers that contained inaccurate valuations and for failing to retain consolidated reports in accordance with securities laws.
The consolidated reporting system combined information regarding customer’s holdings and included assets held both at the firm as well as away from the firm. The system allowed brokers to enter values for assets held away from the firm.
It is common for many firms to exclude from monthly statements, values or alternative assets like REITs, oil and gas partnerships, hedge funds and business development companies.
FINRA Executive VP and Chief of Enforcement Brad Bennett said “Firms must ensure that consolidated reports send to customers are clear, accurate and not misleading. Absent proper supervision, consolidated reports can be used by unscrupulous representatives to conceal fraud and theft”.
For more than two years, according to FINRAs news release, Securities America failed to supervise hundreds of brokers, some of whom were creating and sending false and inaccurate consolidated reports to customers. Many contained inflated values for investments, some of which were in default or receivership.
If you have questions about your account with Securities America, call to speak with an experienced securities attorney to explore your legal rights.
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