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They Fired Me For Whistleblowing, Compliance Officer Claims

August 3, 2018

Purshe Kaplan Sterling Investments Inc. is facing a whistleblower lawsuit from one of its former compliance officers, InvestmentNews writes. A company executive tells the publication, however, that the former officer failed to pass her Series 7 exam as required by her contract.

Toni Caiazzo Neff, who had worked at Finra predecessor NASD Regulation and had more than 20 years experience when she joined Purshe Kaplan in 2014, alleges the firm reassigned her from compliance to auditing once she voiced her concerns about the sale of alternative investments, according to the publication.

This included executing selling agreements prior to conducting due diligence, failure to follow internal procedures, self-dealing, suitability and best execution concerns and more, according to the suit filed in May in U.S. District Court for the Eastern District of Pennsylvania, InvestmentNews writes.

Once Caiazzo Neff alerted Finra to the issue, Purshe Kaplan fired her just days later in January, according to the complaint that names Purshe Kaplan, its holding company PKS Holdings, senior management at the firm, and Wentworth Management, PKS’s new owner, according to the publication.

J. Peter Purcell, Purshe Kaplan’s CEO, tells InvestmentNews in an email that Caiazzo Neff’s whistleblower claim has no merit and the lawsuit is “purely retaliatory” and will eventually get dismissed. He also tells the publication Caiazzo Neff didn’t pass her Series 7 in the four years she was with the firm, despite her employment terms requiring her to do so. But J. Patrick Griffin, an attorney at the Derek Smith Law Group and Caiazzo Neff’s lawyer, tells InvestmentNews that the Series 7 wasn’t a requirement for her job.

"For four previous years her Series 7 wasn’t an issue until she returned her audit findings. Then it was an issue,” he tells the publication. “My guess is they were looking for a reason to fire her."

Purshe Kaplan has run into alternative investments-related trouble with regulators before, InvestmentNews writes. Last year, the company settled with Finra, agreeing to $3.4 million in restitution to a Native American tribe who alleged excessive sales charges on non-traded real estate investment trusts and business development companies, according to the publication.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.