Palm Beach Gardens Brokerage Firm Fined for Overcharging Customers
On February 20th, 2018, the Financial Industry Regulatory Authority (FINRA) announced sanctions against GWN Securities, Inc. (CRD#: 128929), a brokerage firm based in Palm Beach Gardens, Florida. This broker-dealer employs more than 600 securities representatives nationwide and is licensed to operate in all 50 States. According to FINRA investigators, GWN Securities, Inc. failed to identify and apply available sales fee discounts. As a result, its customers were forced to pay more in transaction fees than was warranted. Without admitting to or denying wrongdoing, the brokerage firm consented to FINRA’s sanctions, which included:
- A $100,000 fine;
- Payment of $72,715.82 in financial restitution;
- Public censure; and
- Review and revision of its internal protocols.
In this post, our experienced Miami investment fraud attorneys highlight the specific allegations against GWN Securities. For full information regarding this case, please reference the official FINRA document: Disciplinary Proceeding No. 2016047566601.
The Background
This case involved a financial product called unit investment trusts or UITs. Essentially, a UIT is an exchange traded mutual fund that has a definite life. Under current FINRA rules, registered broker-dealers are required to develop and implement written supervisory procedures (WSPs) to ensure that customers receive the most advantageous possible price when purchasing UITs. Regulators have made it clear that it is the brokerage firm’s responsibility to ensure that it is looking out for the best interests of its customers in recommending or facilitating UIT purchases. Investors should be able to have confidence that their broker is always getting them the best available price.
Violative Conduct
During the review period in this case, FINRA officials determined that GWN Securities failed to apply available sales discounts on at least 340 different transactions. In all, these errors caused the company’s customers to pay more than $72,000 in avoidable transaction fees. In addition, FINRA determined that this brokerage firm had inadequate written supervisory procedures in place. The ineffective WSP made it difficult for the firm’s compliance department to spot violations.
Beyond the failure to apply available fee waivers and discounts, there was also at least one instance discovered in which a securities representative instructed a customer to trade a UIT on a short-term basis. For several different reasons, this is an unsuitable investment strategy. Brokerage firms have a duty to ensure that securities representatives are only offering appropriate investment advice that is truly tailored to the individual needs of the customer. WGN Securities has been instructed to update its WSPs to ensure compliance in the future.
Contact Our Miami FINRA Arbitration Attorneys Today
At Carlson & Associates, P.A., our investment fraud lawyers have extensive experience handling FINRA arbitration cases. If you lost money due to broker negligence, or any other type of misconduct, we can help you get the full settlement offer that you are owed. To arrange a fully private evaluation of your legal claim, please call our team today at 1-(305)-372-9700. With an office in Miami, we serve investors throughout Florida.
Resources:
brokercheck.finra.org/firm/summary/128929
finra.org/sites/default/files/fda_documents/2016047566601%20GWN%20Securities%20Inc%20CRD%20128929%20AWC%20sl.pdf