18 months after ordering Oppenheimer & Co. Inc. to pay $2.5 million in fines and $1.25m in restitution for failing to supervise ex-rep Mark Christopher Hotton, FINRA once again has sanctioned Oppenheimer, this time ordering a total of $3.4 million in fines and restitution for failing to report required information to FINRA, failing to produce documents is discovery to customers who filed arbitrations, and for failing to apply sales charge waivers where applicable.
Specifically, FINRA's punishment of Oppenheimer as relates to the firm's failure to produce documents during discovery directly relates to arbitration claimants that alleged wrongdoing by the aforementioned Hutton.
In 2015, FINRA ordered Oppenheimer & Co. to pay a total of $3.75 million in fines and restitution for failing to supervise Hotton, who himself engaged in excessive trading, fraudulent conduct, and committed other suspicious acts, such as filing odd wire transfer requests, that FINRA said were red flags Oppenheimer should have detected, especially given the fact that the then-newly hired Hotton was a named defendant in a civil action alleging he defrauded prior business partners out of several million dollars, and that Hotton's history included 12 disclosures, including criminal charges, prior to his hiring at Oppenheimer.
Hotton (since barred from the industry)'s present-day BrokerCheck report indicates 32 disclosures; more information about the 2015 action against Oppenheimer is available here: OPPENHEIMER & CO. TO PAY $3.75 MILLION IN FINES & RESTITUTION FOR FAILING TO SUPERVISE THIEVING BROKER MARK HOTTON.
The punishment related to failing to timely report to FINRA more than 350 required findings, including disciplinary actions, settlements, litigation claims, and regulatory findings, also relates to the March 2015 action, which went beyond individual Hotton's misconduct.
Regarding the sales charge waivers, FINRA determined that Oppenheimer failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales, in part due to inadequate written policies or procedures, and, as a result, ordered remediation of $1.14 million to customers who qualified for, but did not receive, applicable mutual fund sales charge waivers.
In a March 2016 study, Oppenheimer ranked #1 amongst all firms in employing the highest percentage of financial advisers who have previously been disciplined for misconduct: whereas the industry average was seven percent, the study found that nearly 20% of advisers in Oppenheimer's employ—or nearly three-times the industry average—had a history of misconduct and discipline.
If you have invested with Oppenheimer & Co., former broker Mark Christopher Hotton, or with any firm whose failure to supervise brokers or financial advisers—or failing to have adequate supervisory systems in place to prevent misconduct or excessive charges and fees—has proven harmful to your investments and interests through excessive trading, suspicious and fraudulent activity, or unsuitable transactions and recommendations, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.
News Release: FINRA Sanctions Oppenheimer & Co. $3.4 Million for Reporting Violations, Failing to Comply With Discovery Obligations in Arbitrations, and Other Supervisory Failures (FINRA)