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Finra Forces B-D to Pay Back Client Over Unsuitable Investments

July 12, 2016

A Financial Industry Regulatory Authority panel has ordered the brokerage firm Garden State Securities to pay back an elderly client for making unsuitable investments and overtrading, InvestmentNews writes.

The firm allegedly invested in speculative products such as penny stocks and leveraged exchange-traded notes on behalf of a customer in his late 70s concerned about monthly expenses, according to the attorneys representing him, Adam Nicolazzo and Robert Van De Veire of Malecki Law, the publication writes. Garden State was ordered to pay $142,168 in compensatory damages, punitive damages, lawyer fees and other costs, according to a Finra dispute resolution document cited by InvestmentNews. That amount was about 66% of the damages plaintiff Anthony Romano originally sought, but Garden State’s attorney, Ian Frimet, a partner at Wexler Burkhart Hirschberg & Unger, said the award was nonetheless “unjustified,” the publication reports.

Meanwhile, Finra has fined RBC Capital Markets $300,000 for failure to update its registered representatives’ records, ThinkAdvisor writes. The firm allegedly didn’t consistently amend Forms U4 about tax liens or civil judgements, despite having wage-garnishing orders on the affected reps, failing to adequately assess whether the events behind the garnishments required further reporting to its compliance department and beyond, according to the web publication.

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The industry-appointed regulator also fined Halen Capital Management for inappropriate private placement marketing, sales of unregistered securities to non-accredited investors, supervisory failures and failure to report an ownership change to Finra, ThinkAdvisor writes.

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