National Planning Corp., Investment Centers of America, SSII Investments, INVEST Financial Censured & Fined
According to the Financial Industry Regulatory Authority (FINRA) on Tuesday, the regulator has sanctioned four National Planning firms for failure to establish, maintain and enforce a supervisory system in regards to variable annuities.
During the Relevant Period, the National Planning firms, which are now part of LPL Financial, each allegedly failed to establish, maintain and enforce a supervisory system and written procedures reasonably designed to supervise representatives’ recommendations of variable annuities.
Each of the firms has reportedly consented to the imposition of the following sanctions: National Planning Corp. consents to a censure and a $650,000 fine. Investment Centers of America consents to a censure and a $115,000 fine. SSII Investments consents to a censure and a $325,000 fine. INVEST Financial consents to a censure and a $600,000 fine.
Variable annuities are complex products that permit customers to choose among a variety of contract features and options. Due in part to the complexity of these products and the inherent risk of sales practice violations they present, FINRA issued Rule 2330 to require that firms enhance their supervisory systems, and provide more comprehensive and targeted protection to investors who purchase or exchange variable annuities.
Failure to Supervise
Brokers have a fiduciary duty to make investment recommendations that are consistent with the clients net worth, investment experience and objectives. Risk tolerance, age, and liquidity needs also need to be considered. Furthermore, brokers are prohibited from engaging in underhanded businesses practice, like churning or unauthorized trading, that violate securities laws and regulations.
When brokers abuse client accounts and conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
This information is publicly available on FINRA’s website and provided to you by The White Law Group. For a free consultation with a securities attorney, please call the offices at 888-637-5510.
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