Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker-dealer, Cadaret, Grant & Co., Inc. (hereinafter “Cadaret Grant”) (CRD # 10641) was recently sanctioned by FINRA’s Department of Enforcement. The sanction occurred as a result of an investigation into its failure to establish and maintain a supervisory system relating to the suitability rules for the recommendation of private securities transactions. Accordingly, the Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding Cadaret Grant.
Registration Background for Cadaret, Grant & Co., Inc.
Cadaret Grant became a FINRA member in 1982. It operates a general securities business and is headquartered in Syracuse, NY. It currently has approximately 800 branch offices and approximately 423 registered representatives.
FINRA’s Allegations against Cadaret, Grant & Co., Inc.
FINRA’s investigation led to Cadaret Grant entering into a Letter of Acceptance, Waiver and Consent (AWC) with FINRA on July 1, 2020. According to the AWC, Cadaret Grant consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:
- “From April 2014 to March 2017 (the Relevant Period), Cadaret Grant failed to reasonably supervise registered representative, SP, who conducted undisclosed private securities transactions”;
- “The private securities transactions were part of a Ponzi scheme that SP orchestrated, which resulted in millions of dollars in losses to its victims, including several customers of Cadaret Grant”;
- “[Cadaret Grant] failed to take reasonable steps to investigate red flags that SP was involved in private securities transactions”;
- “In May 2015, FINRA sent an inquiry to [Cadaret Grant] concerning 11 liens and judgments that SP had failed to disclose in his Uniform Application for Securities Industry Registration (“Form U4”)”;
- “In response to FINRA’s inquiry about SP’s undisclosed financial events, [Cadaret Grant] obtained a public records report about SP in August 2015”;
- “The report listed one of the Ponzi Entities (“Ponzi Entity 1”) as a business with which SP was associated”;
- “However, although [Cadaret Grant] reviewed the report for undisclosed liens, it did not review the report for undisclosed business association”;
- “[Cadaret Grant] did not question SP about Ponzi Entity 1 or take any other steps to investigate what Ponzi Entity 1 was and what role, if any, SP had with Ponzi Entity 1”; and
- As a result of the foregoing, Cadaret Grant violated NASD Rule 3010 (for conduct before December 1, 2014) regarding supervision, FINRA Rule 3110 (for conduct on and after December 1, 2014) regarding supervision and FINRA Rule 2010, regarding standards of commercial honor and principles of trade.
FINRA Sanctions Cadaret, Grant & Co., Inc.
As a result of such violations and in addition to the above described findings and conclusions, FINRA’s July 1, 2020 AWC also indicates that Cadaret Grant consented to the following sanction(s):
- A censure; and
- A fine of $200,000.
Cadaret, Grant & Co., Inc. has a History of Regulatory Actions
In addition to the findings of FINRA’s Department of Enforcement, FINRA BrokerCheck for Cadaret Grant (pages 26 – 67) reveals that it has a history of regulatory actions being taken against the firm. More specifically, 15 regulatory actions were brought for violations that include, but are not limited to the following sample:
- A $800,000.00 fine by FINRA for failure to establish a reasonably-designed supervisory system (September 11, 2018);
- A $500,000.00 fine by the SEC failure to supervise (September 11, 2018);
- A $75,000.00 fine by the state of Massachusetts for an unregistered employee providing investment advisory services (June 12, 2018); and
- A $280,000.00 fine for failure to disclose a conflict of interest concerning mutual fund share classes (August 1, 2017)
Cadaret, Grant & Co., Inc. has a History of Complaints
In addition to the above, FINRA BrokerCheck for Cadaret Grant (pages 68 – 71) also reveals it has a history of customer complaints/arbitrations including but not necessarily limited to the following:
- On April 16, 2002 a customer initiated an arbitration against Cadaret Grant alleging breach of fiduciary duty, misrepresentation, omission of facts and suitability with regards to an investment in an annuity. The customer alleged damages in the amount of $88,059.72. The arbitration resulted in an award against the firm on June 3, 2003, in the amount of $115,116.42.
- On April 17, 2002 a customer initiated an arbitration against Cadaret Grant alleging breach of fiduciary duty, omission of facts, suitability and breach of contract with regards to an investment in common stock. The customer alleged damages in the amount of $2,400,000.00. The arbitration resulted in an award against the firm on April 25, 2003, in the amount of $464,514.00.
- On December 3, 2003 a customer initiated an arbitration against Cadaret Grant alleging breach of fiduciary duty, misrepresentation, unauthorized trading and failure to supervise. The customer alleged damages in the amount of $43,000.00. The arbitration resulted in an award against the firm on August 19, 2004, in the amount of $88,028.08.
- On September 5, 1999 a customer initiated an arbitration against Cadaret Grant alleging failure to execute order instructions, a form of negligence. The customer alleged damages in the amount of $4,129.00. The arbitration resulted in an award against the firm on June 27, 2000, in the amount of $4,304.00.
If you or someone you know has or had a brokerage account with Cadaret, Grant & Co., Inc. and have concerns regarding losses in your investments 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.
