Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker-dealer, Independent Financial Group, LLC (CRD # 7717) was recently sanctioned by FINRA’s Department of Enforcement after an investigation into its failure to adequately supervise a registered representative who made unsuitable recommendations of non-traded REITs to customers.
The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding Independent Financial Group, LLC.
Registration Background for Independent Financial Group, LLC
Independent Financial Group, LLC has been a member of FINRA (and its predecessor the NASD) since 1978 with its main office located in San Diego, CA. The firm conducts a general securities business and has approximately 370 branch offices with approximately 660 registered representatives.
FINRA’s Allegations
According to FINRA Letter of Acceptance, Waiver and Consent (AWC) dated April 8, 2021, Independent Financial Group, LLC consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:
- “From January 2008 through March 2016, [Independent Financial Group, LLC] failed to reasonably supervise one of the firm’s former registered representatives (“RR 1”) who made unsuitable recommendations to customers”;
- “During the relevant period, [Independent Financial Group, LLC] failed to reasonably supervise RR l’s recommendations of alternative investments to customers, including senior customers, and failed to reasonably investigate red flags. RR 1 solicited dozens of customers who were retiring or had retired to liquidate their 401(k) and pension plans and invest the proceeds with him at [Independent Financial Group, LLC]”;
- “RR 1 then recommended that many of these customers concentrate their retirement assets in non-traded REITs and structured notes”;
- “Many of the customers had little or no investment experience and had never purchased alternative investments”;
- “In October 2011, FINRA issued an Investor Alert on non-traded REITs entitled, “Perform a Careful Review Before Investing.” In that alert, FINRA explained that “shares of non-traded REITs do not trade on a national securities exchange. For this reason, non-traded REITs are generally illiquid, often for periods of eight years or more“”;
- “[Independent Financial Group, LLC] became aware of red flags indicating that RR 1 was making unsuitable recommendations to his customers yet the firm failed to take reasonable actions to investigate and stop the misconduct”; and
- By virtue of his it’s actions, Independent Financial Group, LLC. violated NASD Rule 3010 and FINRA Rule 3110, regarding supervision; and FINRA Rule 2010, regarding standards of commercial honor and principles of trade.
FINRA’s Sanctions
FINRA’s April 8, 2021 AWC also indicates that as a result of Independent Financial Group, LLC’s failure to supervise, it consented to the following sanction(s):
- A censure;
- A fine in the amount of $200,000.00; and
- Certification Regarding Implementation of Reasonably Designed Procedures within 90 days of the date of the AWC
Independent Financial Group, LLC Has A History of Regulatory Actions
In addition to Independent Financial Group, LLC being sanctioned for its failure to adequately supervise a registered representative’s sales of REITs, as described in the April 8, 2021 AWC, FINRA BrokerCheck for Independent Financial Group, LLC reveals it has a prior history of regulatory actions, including but not limited to the following:
- On September 30, 2019, the SEC sanctioned the firm for willfully violating sec. 206(2) of the Advisers Act of 1940, by breaching its fiduciary duty and failing to adequately disclose fund share class selection and fees regarding mutual fund sales. The sanctioned included censured; disgorgement of $1,250,386.58 and pre-judgment interest in the amount of $175,764.06.
- On June 30, 2014, the State of Virginia – State Corporation Commission sanctioned the firm for allowing agents James Crawford and Neal Woodard to violate state securities laws by making untrue statements in the sale of securities and recommending the purchase of unsuitable alternative investments (i.e. REITs). The sanctioned included a monetary fine in the amount of $35,00.00.
Independent Financial Group, LLC Has No History of Customer Complaints
FINRA BrokerCheck for Independent Financial Group, LLC also reveals it has no history of customer complaints and/or customer-initiated arbitrations.
If you or someone you know has or had a brokerage account with Independent Financial Group Group, LLC and have concerns regarding losses in your investments, including REITs 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.
