A broker-dealer and one of its supervisors agreed to settle FINRA charges for allegedly failing to implement an adequate supervisory system to comply with FINRA's suitability rule. The failure allowed two registered representatives to recommend "excessive and unsuitable trades" in several customer accounts.
According to the Letter of Acceptance, Waiver and Consent, Buckman, Buckman & Reid, Inc. ("BBR") and one of its supervisors failed to (i) identify that a registered representative had conducted "frequent and short-term trading of Unit Investment Trusts and other long-term investments with significant up-front costs," and (ii) that another registered representative had "excessively traded" three customer accounts and recommended that four additional customers buy concentrated positions in a "single, speculative security."
To settle the charges, BBR agreed to a censure and to pay $205,554 in restitution to customers. The supervisor agreed to a three-month suspension from association with a broker-dealer as a principal, to pay a fine of $20,000, and to complete 40 hours of continuing education concerning supervisory responsibilities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
