WFG Investments Inc. Censured & Fined
According to FINRA, on May 31, 2017, WFG Investments Inc. (CRD #22704, Dallas, Texas) was issued and AWC in which the firm was censured and fined $150,000.
Without admitting or denying the findings, WFG Investments Inc. consented to the sanctions and to the entry of findings that it failed to appropriately supervise the sales practices of a registered representative who engaged in unsuitable trading in the brokerage and advisory accounts of his customers, primarily by inappropriately concentrating his customers’ accounts in low-priced securities.
The findings stated that senior personnel at the firm were aware of red flags that the representative was engaged in unsuitable trading with respect to low priced securities. The firm consistently failed to take adequate supervisory steps to ensure that the representative’s sales of low-priced securities to his customers were suitable.
The firm thus failed to appropriately respond to the red flags that it was made aware of at two separate meetings held at its headquarters that were attended by senior supervisory and compliance personnel, as well as the representative’s direct supervisor.
Despite the firm’s knowledge of numerous red flags regarding the representative, he was never placed on heightened supervision during his tenure with the firm. Additionally, the firm conducted an inadequate inspection of the representative’s branch office. The compliance manager assigned to conduct this audit had participated in the first meeting at the firm’s headquarters. Notwithstanding his knowledge of potential sales practice violations involving low-priced securities, the audit he conducted related only to non-sales practice issues, such as the review of change of address requests and a check of controls over the receipt of incoming mail.
This supervisory failure facilitated the representative’s ongoing sales practice violations, which continued over an 18-month period at the firm.
For FINRA’s full findings see FINRA Case #2015045755003.
This information, which is publicly available on FINRA’s website has been provided by The White Law Group.
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