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After $13 Million in Penalties for 'Widespread Failure,' Oppenheimer Fined $500,000 for Supervisory and Suitability Gaps

Attorney Advising Disclaimer

Oppenheimer & Co. kicked off its first quarter of 2024 by paying $13 million in fines for what investigators deemed a "widespread and longstanding failure" in its business operations. With a most recent FINRA-imposed fine of $500,000 for supervisory and suitability failures purportedly affecting as many as 14,000 customers, Oppenheimer has racked up quite the fiscal rap sheet just a few months into the year.

In March 2024, the Commodity Futures Trading Commission issued Oppenheimer a $1 million penalty for failing to maintain and preserve records due to improper communication through unapproved methods, such as personal text and WhatsApp messages, conducted away from the firm in a way that these communications could avoid the supervision or records retention that would be standard for communication conducted via company-provided e-mail addresses.

This fine followed a February 2024 penalty in the amount of $12 million, issued by the Securities and Exchange Commission, for a similar off-channel communications infraction described by SEC investigators as "widespread and longstanding" as part of its reasoning for imposing such a sizeable fine.

Most recently, however, FINRA on May 7, 2024 censured and fined Oppenheimer $500,000 for failing to have a reasonable supervisory system in place and for failing to supervise the suitability of transactions its brokers recommended to at least 14,000 customers.

FINRA wrote that Oppenheimer failed to ensure its representatives collected data about its direct business customers' investment profiles, which would include important information such as investment time horizons, liquidity needs, etc., that would be valuable for risk and suitability determinations.

By failing to adequately supervise this area of its business, investigators say Oppenheimer was unable to determine the suitability of certain securities transactions. This could conceivably mean that thousands of Oppenheimer customers may have been subject to direct business transactions—up to 490,000 such transactions, according to the report—that potentially were unsuitable given those customers' risk tolerances, preferred time horizons, and other investment objectives which Oppenheimer had failed to collect beforehand.

2024 is revealing Oppenheimer's culture to be one of viewing compliance and supervision as a cost-center rather investor protection.

If you invested with a broker or investment adviser at Oppenheimer & Co. or with any brokerage firm whose failure to accurately assess whether a certain transaction was suitable given your investment objectives, such as risk tolerance preference or goals, and such an unsuitable recommendation or trade has since resulted in losses or other damages, 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.

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