Florida Brokerage Firm Censured, Fined for Failure to Implement Supervisory System to Regarding the Recommendation of Risky Alternative Mutual Funds
J.W. Cole Financial, Inc. (CRD No. 124583) is a national brokerage firm with main headquarters in Tampa, Florida. The broker-dealer is licensed to operate in 52 U.S. states and territories. In March of 2021, the Financial Industry Regulatory Authority (FINRA) announced a censure and fine against J.W. Cole Financial, Inc. Here, our Miami unsuitable investment attorney provides an overview of the Letter of Acceptance, Waiver, and Consent signed by J.W. Cole Financial, Inc.
An Overview of the Allegations Against J.W. Cole Financial, Inc.
Based in Florida, J.W. Cole Financial, Inc. has more than 275 branch offices located throughout the United States. FINRA launched an investigation into the practices of the firm after allegations that it failed to comply with securities industry regulations. Between May of 2017 and December of 2017, FINRA alleges that J.W. Cole Financial, Inc. failed to properly supervise some of the investment recommendations made by its representatives.
The allegations in question were centered on the sale of an alternative mutual fund known as the LJM Preservation & Growth Fund (LJM). The fund uses a complex, risky strategy that many investors did not fully understand. FINRA notes that brokers at J.W. Cole Financial, Inc. sold more than $1 million worth of shares of LJM during the relevant review period. During that time, the value of the fund dropped by a staggering 80 percent—far more than investors were led to believe was possible.
FINRA Sanctions: Public Censure, Fine, and Financial Restitution
Under FINRA Rule 2111, registered financial professionals are required to ensure that investment recommendations are reasonably suitable for customers. Brokerage firms have a responsibility to put an adequate supervisory system in place to ensure that brokers are abiding by the rules. In this case, FINRA contends that J.W. Cole Financial, Inc. failed to do so. Without admitting wrongdoing, the Tampa, Florida-based broker-dealer consented to FINRA’s penalties, including:
- A public censure;
- A $50,000 fine; and
- Payment of $163,527 in restitution to investors (plus interest); and
- Revision of its practices to ensure compliance in the future.
Investors can take action to recover financial compensation for losses caused by unsuitable investment recommendations. Brokers and brokerage firms must ensure that specific investment and the overall investment strategy are appropriate for their customers. They can be held liable for damages caused by their failure to abide by industry standards.
Contact Our Florida Unsuitable Investment Lawyers for Immediate Help
At Carlson & Associates, P.A., our Miami FINRA arbitration attorneys have the skills, expertise, and legal knowledge to handle the full spectrum of unsuitable investment claims. If you suffered losses in a risky alternative mutual fund, we are more than ready to help. Contact us today for a fully private case evaluation with an experienced lawyer. With a legal office in Miami, we represent investors in Miami-Dade County, Broward County, Palm Beach County, and beyond.
Resource:
brokercheck.finra.org/firm/summary/124583