FINRA fined Infinity Financial Services of Oakland, California $35,000 for failing to conduct adequate background investigations of registered representatives during a period of rapid growth in 2016 and 2017, and for failing to seek regulatory approval for a material change in business as it speedily increased its staff.
A firm that fails to adequately vet or supervise a broker it hires may be liable if such a broker engages in misconduct or other malfeasance that could have been avoided had the firm adequately run a background check that may have detected prior instances of fraud or other misdeeds.
According to AWC #2016047845201, Infinity Financial failed in its supervisory responsibility by not complying with industry rules requiring firms conduct background investigations of potential registrants, including a failure to search certain public records and contact former employers. FINRA found that as a result, the firm hired 16 registered representatives without conducting a pre-registration search in the Central Registration Depository (CRD), which is a database of individuals not currently associated with the firm who may be considered for employment.
Instead, Infinity Financial allegedly used public Google internet searches, which may have left out valuable background information that could have been available via the industry's CRD database.
Furthermore, Infinity Financial allegedly failed to seek prior approval from regulators for a material change in its business, which manifested when Infinity Financial expanded its business by increasing its staff by more than 30%, which is the industry threshold that triggers a rule requiring the firm to seek prior approval from FINRA before so dramatically expanding its operation.
Investigators state that in hiring so many representatives so quickly without filing appropriate paperwork with FINRA, Infinity Financial grew its business in contravention of industry rules and without proper oversight, review, or permission from regulatory staff.
Infinity Financial's principal officer and President, Gregory Burton Gilbert (CRD #3119457), first registered with Infinity Financial Services over a decade ago, following two customer complaint disclosures from when he was associated with Merrill Lynch, one of which was denied and the other which was closed.
If you have invested with Infinity Financial Services or with any firm whose deficient supervision has led to an investment with an unqualified broker or other financial adviser with a checkered past that has proven harmful to your investments or interests, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.