Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker-dealer, Securities America, Inc. (CRD # 10205) was recently sanctioned by FINRA’s Department of Enforcement after an investigation into its failure to adequately supervise its representatives’ recommendations of LJM Preservation & Growth Fund (LJM), an alternative mutual fund.
The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding Securities America, Inc. and LJM.
Registration Background for Securities America, Inc.
Securities America, Inc. has been a member of FINRA since 1981 with its main office located in La Vista, NE. The firm has approximately 2,400 branch offices with approximately 4,200 registered representatives. It offers investment banking services.
FINRA’s Allegations Against Securities America, Inc.
According to FINRA Letter of Acceptance, Waiver and Consent (AWC) dated March 29, 2021, Securities America, Inc. consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:
- “Between August 17, 2016, and February 8, 2018, [Securities America, Inc.] failed to reasonably supervise representatives’ recommendations of an alternative mutual fund—the LJM Preservation & Growth Fund (LJM)”;
- “[Securities America, Inc.] permitted the sale of LJM on its platform without conducting reasonable due diligence and without a sufficient understanding of its risks and features, including the fact that the fund pursued a risky strategy that relied, in part, on purchasing uncovered options”;
- “[Securities America, Inc.]…lacked a reasonable supervisory system to review representatives’ LJM recommendations”;
- “[Securities America, Inc.] representatives sold more than $616,000 in LJM to thirty-three customers”; and
- By virtue of his it’s actions, Securities America, Inc. violated FINRA Rule 3110, regarding supervision and FINRA Rule 2010, regarding standards of commercial honor and principles of trade.
FINRA Sanctions Securities America, Inc.
As a result of Securities America, Inc.’s failure to supervise the sales of the LJM Preservation & Growth Fund, as described in the above findings and conclusions, FINRA’s March 29, 2021 AWC also indicates that Securities America, Inc. consented to the following sanction(s):
- A censure;
- A fine in the amount of $100,000.00; and
- Restitution in the amount of $235,979.77.
Securities America, Inc Has A History of Regulatory Actions
In addition to Securities America, Inc. being censured and fined for its failure to adequately supervise sales of the LJM Preservation & Growth Fund, as described in the March 29, 2021 AWC, FINRA BrokerCheck for Securities America, Inc. reveals it has a history of regulatory actions, including but not limited to:
- Entering into an AWC with FINRA on February 23, 2021 regarding findings that it caused registered representatives that it was recruiting from other member firms to take non-public personal customer information from those firms. It was censured and fined $125,000.00.
- Entering into an AWC with FINRA on September 7, 2018 regarding findings that it failed to establish, maintain and enforce a supervisory system and written procedures reasonably designed to ensure that recommendations of various types of securities and/or investments complied with securities laws. It was censured and fined $175,000.00.
- On August 25, 2016 the State of Nebraska Department of Banking & Finance conducted an investigation of Securities America, Inc. alleging 1) it made unsuitable recommendations to a client to purchase and continue to hold non-traditional exchange traded funds; and 2) failure to supervise. The firm was ordered to pay a fine in the amount of $30,000.00.
- Entering into an AWC with FINRA on July 29, 2016 regarding findings of it 1) failed to identify and apply sales charge discounts to certain customers’ eligible purchases of mutual funds; and 2) failed to supervise. It was censured and paid a fine in the amount of $1,541,419.00.
Securities America, Inc Has A History of Customer Complaints
FINRA BrokerCheck for Securities America, Inc. also reveals it has a history of customer complaints and/or customer-initiated arbitrations, including but not limited to:
- On July 27, 2001, a customer-initiated arbitration was filed with the NASD naming Securities America, Inc. as a respondent. The customer alleged breach of fiduciary duty and failure to supervise. The customer further alleged damages in the amount of $200,000.00. On June 28, 2002, the arbitration panel issued an award for the customer ordering Securities America, Inc. to pay $54,097.64 in damages.
- On October 19, 2001, a customer-initiated arbitration was filed with the NASD naming Securities America, Inc. as a respondent. The customer alleged misrepresentation, failure to supervise and negligence. The customer further alleged damages in the amount of $5,883,000.00. On September 23, 2003, the arbitration panel issued an award for the customer ordering Securities America, Inc. to pay $896,629.77 in damages.
- On December 11, 2001, a customer-initiated arbitration was filed with the NASD naming Securities America, Inc. as a respondent. The customer alleged breach of fiduciary duty, breach of contract, negligence and failure to supervise. The customer further alleged damages in the amount of $275,951.00. On June 28, 2002, the arbitration panel issued an award for the customer ordering Securities America, Inc. to pay $54,097.64 in damages.
If you or someone you know has or had a brokerage account with Securities America, Inc. and have concerns regarding losses in your investments, including the LJM Preservation & Growth Fund 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.
