FINRA fines investment firm for $3.4 Million
FINRA Sanctions Oppenheimer & Co. $3.4 Million for Reporting Violations, Failing to Comply With Discovery Obligations in Arbitrations, and Other Supervisory Failures
The Financial Industry Regulatory Authority (FINRA) announced that it has fined Oppenheimer & Co. Inc. $1.575 million and ordered the firm to pay $1.85 million to customers for failing to report required information to FINRA, failing to produce documents in discovery to customers who filed arbitrations, and for not applying applicable sales charge waivers to customers.
Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said, “It’s important for firms to ensure their supervisory programs are designed to comply with FINRA reporting requirements, and that their procedures provide adequate direction to their employees to make required filings. FINRA uses this information to identify and initiate investigations of firms and associated persons that pose a risk to investors.”
FINRA found that over a span of several years, Oppenheimer failed to timely report to FINRA more than 350 required filings including securities-related regulatory findings, disciplinary actions taken by Oppenheimer against its employees, and settlements of securities-related arbitration and litigation claims. FINRA rules require firms to timely and accurately report required information, yet Oppenheimer’s procedures did not provide direction to its employees on making these disclosures. On average, Oppenheimer made these filings more than four years late. Oppenheimer also failed to timely disclose that its then Anti-Money-Laundering Compliance Officer and another employee had received Wells notices from the Securities and Exchange Commission. Oppenheimer had revised its supervisory procedures as a result of a prior FINRA investigation but failed to adopt adequate procedures that addressed a specific obligation to report regulatory events involving its employees.
In addition, FINRA found that between 2010 and 2013, Oppenheimer failed to produce relevant documents during discovery to seven arbitration claimants who alleged Oppenheimer failed to supervise former registered representative Mark Hotton. Oppenheimer failed to provide spreadsheets showing that Mark Hotton had excessively traded multiple customer accounts. Oppenheimer has paid more than $6 million to resolve customer arbitration claims related to its supervision of Hotton. Additionally, FINRA had previously ordered Oppenheimer to pay $1.25 million in restitution to 22 additional customers who suffered losses but had not filed arbitration claims. In today’s action, FINRA is ordering Oppenheimer to provide the seven claimants with copies of the respective documents that were not produced, and payments totaling more than $700,000.
FINRA also found that Oppenheimer failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales. The firm relied on its financial advisors to determine the applicability of sales charge waivers, but failed to maintain adequate written policies or procedures to assist financial advisors in making this determination. As a result of today’s action, Oppenheimer has paid eligible customers $1.14 million in remediation to customers who qualified for, but did not receive, applicable mutual fund sales charge waivers.
In settling this matter, Oppenheimer neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
Source: FINRA
