FINRA fined Citizens Securities, Inc. $300,000 for disclosure failures related to customer complaints and other reportable events concerning its registered representatives, and for failing to implement an adequate supervisory system to ensure that complaints and settlements were included on representatives' disclosure forms.
The findings state that from January 2010 through June 2016, Citizens Securities failed to timely amend two industry forms (U4 and U5) to report disclosable events, including complaints, disputes, and disciplinary issues.
Furthermore, Citizens Securities purportedly failed to establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with reporting laws and regulations, such as those associated with the disclosure failures herein.
When a brokerage fails to timely report broker and financial adviser disclosures, it leaves the investing public in the dark and at risk of being unaware that they might be investing with a problematic broker.
Sometimes, the problem begins when the troubled representative fails to disclose something to the employer firm: for instance, former Colorado Financial Service Corporation (Carlsbad, CA) broker Tracy Rae Turner failed to disclose certain sales to the firm, leading to charges of selling away, and a slew of multimillion-dollar customer disputes in Turner's file alleging fraud, unsuitable recommendations, misrepresentation, and negligence.
In that case, Turner's disclosure failures might very well have contributed to a lack of information concerning Turner's professional activities. Similarly, when Davood Kohan settled a customer complaint away from and without notifying his firm, First Allied Securities of San Francisco, FINRA's report confined itself to one problem broker: Kohan, and only Kohan.
By contrast, Citizens Securities' purported disclosure failures, as FINRA found that they were structural in nature, may very well have coincided with misinformation or lack thereof as relates to multiple brokers and advisers under the firm's purview, similar to a 2015 decision in which FINRA fined UBS Financial Services $500,000 for failing to report liens or civil judgments for up to 100 brokers from 2010 through 2013.
With high-risk and recidivist brokers comprising a key area of concern for Enforcement, timely disclosure of a broker's reportable trouble spots is key.
If you have invested with a Citizens Securities broker or financial adviser whose undisclosed checkered past may have led to a conflict of interest, fraudulent, or other detrimental situation that proved harmful to your investments or interests that would have played out differently had you timely known of the broker's troublesome history, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.