SEC censures and fines Herbert J Sims and Co., Boca Raton, FL
According to an SEC order on July 30, the regulator has initiated a cease and desist order and fined Herbert J Sims & Co., a registered broker-dealer based in Fairfield, CT, $250,000 for allegedly making unsuitable recommendations of certain highly-complex and high-risk variable interest rate structured products.
According to the order, from January 2015 through April 2018 thirteen registered representatives from Herbert J Sims’ Boca Raton, Florida branch office purportedly recommended variable interest rate structured products to forty-five customers for whom such investments were reportedly unsuitable in light of their financial situations and needs.
High-risk Variable Interest Rate Structured Products
Broker dealers are required to recommend suitable investments to its customers based on each individual customer’s investment profile including investment objectives, financial condition, risk tolerance, and age.
According to the order, the structured products that Herbert J Sims recommended to the Customers were allegedly high risk, complex products, with a maturity period of fifteen years or more and containing both a bond component and an embedded derivative component. While the investments allegedly initially paid a high fixed introductory rate, they purportedly converted to a variable rate after the initial fixed rate period. During the variable rate period, the structured products reportedly no longer guarantee interest payments and are considered “principal-at-risk” securities, which means that investors can also lose some or all of their invested principal at maturity.
Herbert J Sims’ representatives purportedly recommended these structured products to their customers despite these complexities and risks and the Customers’ investment profiles.
Failure to Supervise
Between January 2015 and April 2018, the firm also purportedly failed to reasonably supervise its registered representatives regarding the alleged unsuitable recommendations.
The SEC has reportedly censured and fined Herbert J. Sims & Co. $250,000 and reportedly ordered the firm to cease and desist further violations, according to the order.
Potential Lawsuits to Recover Financial Losses
This information is all publicly available and provided by The White Law Group.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois.
If you are concerned about investments with Herbert J Sims & Co., the securities attorneys at the White Law Group may be able to help you. For a free consultation with a securities attorney, please call The White Law Group’s Chicago office at 888-637-5510.
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