FINRA

The Frankowski Firm is investigating potential claims against FINRA-expelled broker David L. Barber, of San Diego, California, following Mr. Barber’s expulsion from the securities industry due to his failure to cooperate with a FINRA investigation into allegations that he engaged in unauthorized trading in to the accounts of Madison Avenue customers, exercised discretion in customer accounts without written authorization, or otherwise acted in violation of FINRA rules. Barber and Madison Avenue were also the losing parties in a FINRA arbitration award last month of over $2 million in compensatory damages, punitive damages, attorney’s fees, and case expenses, based on allegations that Madison Avenue and Barber engaged in churning, unauthorized trading, breach of fiduciary duty, and failure to supervise trades in a customer’s account. Prior to his employment at Madison Avenue, Barber was previously fined and censured by FINRA for receiving $867,000.00 in five loans from customers of his firm, while concealing the loans from his employer. Even though Barber paid [...]

The Frankowski Firm is investigating potential claims against MML Investors Services, Inc., of Springfield, Massachusetts. The firm has been the subject of ten regulatory actions within the past ten years, not including this month’s FINRA permanent bar of former MML broker Brian Michael Travers of Long Island, New York for failing to cooperate with FINRA’s investigation into his potential undisclosed outside business activities and private securities transactions while he was associated with MML. In June, MML was censured and fined $750,000 by FINRA for its failure to maintain adequate storage of electronic records. In November 2016, MML was sanctioned by FINRA and fined over $1.8 million for its alleged failures to provide available sales charge waivers to retirement plan and charitable organization customers. FINRA found that these eligible customers were instead sold Class A shares with a front-end sales charge or were sold Class B or C shares with back-end sales charges and high fees and expenses. FINRA ordered the [...]

The Frankowski Firm is investigating potential claims against Morgan Stanley Smith Barney LLC, based on a $3.25 million fine and $9.78 million in customer restitution ordered by the Financial Industry Regulatory Authority (“FINRA”) against the firm for its supervisory failures related to short-term trades of unit investment trusts (UITs). A UIT is a company that sells units in a portfolio of securities with a termination of a specific maturity date; often between one and two years. UITs come with a number of fees and expenses, including deferred sales charges and a creation and development fee. Brokers who recommend a strategy of continual rolling over of investments from one UIT to another before their maturity date can incur increased fees and sales charges over time, which can be a lucrative strategy for the broker but wholly unsuitable for an investor. FINRA found that from January 2012 through June 2015, hundreds of Morgan Stanley brokers executed short term UIT rollovers in thousands [...]