FINRA has fined Dallas, Texas-based brokerage firm WFG Investments, Inc. $700,000 for numerous supervisory failures. FINRA found that from March 2007 to January 2014 WFG failed to commit the time, attention, and resources to a range of critical supervisory obligations. Brokerage firm supervisors are the first line of defense to protect customers from stockbroker misconduct. For that reason, FINRA requires brokerage firms to supervise brokers adequately. Failing to do so can lead to customer investment losses when broker misconduct or fraud is not identified and stopped.
Among other things, FINRA alleged that WFG failed to conduct appropriate due diligence and supervision with respect to a broker’s sale of a private placement securities that WFG had not approved.
FINRA also alleged that WFG failed to have an adequate supervisory system to ensure suitable customer transactions and that between August 2012 and July 2013, WFG gave one of its brokers a “blanket waiver” from compliance with WFG’s written supervisory procedures concerning sale of alternative investments, including real estate investment trusts and private equity. These are violations of some of the most fundamental supervisory functions. While WFG agreed to pay the $700,000 settlement without admitting or denying FINRA’s findings, WFG’s supervisory conduct is very disturbing if FINRA’s findings are accurate.
Finally, FINRA found that a WFG broker routinely made statements on a radio broadcast that were “exaggerated, misleading or unbalanced, both in his negative description of conventional investments and his praise for various alternative investments.” WFG failed to adequately supervise the broker’s radio broadcasts, thus allowing the improper conduct to take place.
If you have lost money in investments sold to you by a WFG broker, including private placement securities, contact one of our investment fraud lawyers for a free consultation.
