The White Law Group is investigating potential securities claims involving Next Financial Group (CRD# 46214, Houston, Texas)
Next Financial Group, headquartered in Houston, Texas, is a national financial advisory firm. According to its FINRA Broker Report, the firm reportedly has 30 disclosure events on its broker record including 24 regulatory events, and 3 arbitrations.
Next Financial Group has had numerous violations with regulators including the sale of fraudulent private placements, excessive trading, and excessive broker commissions. After FINRA fined Next $1.54 million and ordered it to pay $2.1 million in restitution in 2017 the firm apparently adopted new corrective measures, but FINRA claims these procedures were flawed, ultimately allowing more misconduct.
July 2020 – Massachusetts Securities Division charged Charles C. Kulch, a former Next Financial Group broker, with unsuitable sales of illiquid, high-commission products, including non-traded REITs and variable annuities.
Kulch reportedly generated close to $1 million in commissions from the sale of non-traded REITs and variable annuities in a five-year period, according to the complaint.
Prior to that, Massachusetts Securities Division reportedly reached a settlement and fined Next Financial $150,000 in connections with alleged sales practice violations and a failure to supervise, including the purported unsuitable sales of non-traded REITs by Kulch.
Kulch allegedly sold non-traded REITs to more than 100 Massachusetts investors, including nearly 50 transactions that purportedly violated Next Financial’s own policies regarding overconcentration and prohibiting the sale of non-traded REITs to customers over the age of 80.
February 2020 – Texas Securities Commission orders Next Financial Group to refund $500,000 to customers.
The Texas Securities Commission ordered Next to refund $500,000 to customers after a registered representative allegedly moved them into and out of A-share mutual funds to purportedly generate commissions.
According to the complaint, from 2014 through 2018, the broker allegedly made hundreds of trades involving the Class A shares of mutual funds, which typically cost investors more than other mutual fund share classes because they carry an upfront sales charge of up to 5% or higher.
The charge, known as a front-end sales load, is paid to the broker as a commission.
The firm agreed to pay a $100,000 fine for purportedly failing to properly supervise the broker, who is reportedly no longer registered with Next or any other firm.
According to the regulator in a news release, Next Financial Group “failed to rein in the agent even though it received hundreds of alerts from the regulatory system it had set up to detect mutual-fund switching.”
December 2017 – The Financial Industry Regulatory Authority (FINRA) fined Next Financial Group Inc. $750,000 as part of a settlement for several supervisory violations.
From August 2012 through September 2015. Next Financial allegedly failed to detect excessive trading in a senior investor’s accounts that resulted in losses of $392,000 and an unnamed broker generating total gross commissions of $148,000, according to the settlement.
Next Financial had similar problems concerning the supervision of sales of variable annuities, which accounted for a significant part of its revenues, during that time period.
Investigating Potential Claims
All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct. 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.
When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.
Free Consultation with a Securities Attorney
The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois.
If you have concerns regarding investments you purchased through Next Financial Group and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.