Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker-dealer, American Independent Securities Group, LLC (CRD # 135288) was recently sanctioned by FINRA’s Department of Enforcement after an investigation into its failure to adequately supervise sales of collateralized mortgage obligations (CMO’s).
The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding American Independent Securities Group, LLC and CMO’s.
Registration Background for American Independent Securities Group, LLC
American Independent Securities Group, LLC has been a member of FINRA since 2005 with its main office located in Eagle, IA. The firm conducts a general securities business and has approximately 46 branch offices with approximately 56 registered representatives.
FINRA’s Allegations
According to FINRA Letter of Acceptance, Waiver and Consent (AWC) dated March 29, 2021, American Independent Securities Group, LLC consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:
- “[The] matter originated from a 2017 cycle examination of [American Independent Securities Group, LLC]”;
- “From October 2014 through April 2017, [American Independent Securities Group, LLC] … failed to (a) establish, maintain, and enforce a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with applicable rules relating to sales of collateralized mortgage obligations (CMOs); (b) take reasonable action to ensure that [Nicholas] Cioffi-the principal to whom [Ryan] Carlson [the operations/supervisory principal] had delegated responsibility for supervising Representative A and his CMO recommendations-was properly executing that responsibility; (c) reasonably respond to red flags indicating that Representative A’s CMO recommendations were unsuitable; and (d) reasonably supervise discretionary trading and accounts held by senior investors”;
- “During this period, however, [American Independent Securities Group, LLC] … did not establish any procedures related to CMO transactions or the suitability of CMO recommendations”;
- “Although the firm did not have any written supervisory procedures addressing CMO transactions, [the designated operations principal/supervisor] [Nicholas] Cioffi ignored multiple red flags that should have alerted him that Representative A’s … recommendations were potentially unsuitable”;
- “[The designated operations principal/supervisor] [Nicholas] Cioffi should have followed up on these red flags because reasonable supervision entails investigation of red flags that suggest misconduct may be occurring and taking any appropriate steps following such investigation”;
- “[Had the] procedures for discretionary and senior accounts, … been enforced, [they] would have highlighted the suitability red flags raised by Representative A’s recommendations, including the undue concentration, the inconsistency between the recommendations and the customers’ objectives and risk tolerances, the customers’ limited income net worth, and the fact that many customers were seniors who held their securities in retirement accounts”; and
- By virtue of his it’s actions, American Independent Securities Group, LLC. violated NASD Rule 3010 and FINRA Rule 3110, regarding supervision; NASD Rule 2510, regarding discretionary accounts; as well as FINRA Rule 2010, regarding standards of commercial honor and principles of trade.
FINRA’s Sanctions
FINRA’s March 29, 2021 AWC also indicates that as a result of American Independent Securities Group, LLC’s failure to supervise discretionary accounts and the sales of CMO’s, it consented to the following sanction(s):
- A censure; and
- Partial restitution in the amount of $275,000.00.
No History of Regulatory Actions or Customer Complaints
In addition to American Independent Securities Group, LLC being censured and fined for its failure to adequately supervise sales of CMO’s, as described in the March 29, 2021 AWC, FINRA BrokerCheck reveals it has no prior history of regulatory actions or customer complaints and/or customer-initiated arbitrations.
If you or someone you know has or had a brokerage account with American Independent Securities Group, LLC and have concerns regarding losses in your investments, including CMO’s or possible sales practice violations including fraud, you may be entitled to recover lost funds. The Law Office of Kevin J. Deloatch, Esq. has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation. The time to file your claim may be limited so you should call today to avoid delay.
