In February of 2017, investigators from the Financial Industry Regulatory Authority (FINRA) determined that National Planning Corporation had failed to properly apply certain sales charge discounts in relation to its customers’ mutual fund purchases. As a result of the negligence, several of the firm’s clients were adversely affected, spending far more in transaction fees than was necessary.
Registered broker-dealers have a professional responsibility to look out for the best interests of their clients, ensuring that they limit their transactions fees to the best extent possible. As a result of the findings, FINRA fined National Planning Corporation $60,000 and ordered the firm to pay $521,370 in financial restitution to customers.
In February of 2015, a FINRA arbitration panel based in Des Moines, Iowa found that National Planning Corporation was legally liable for one of its customer losses in a failed real estate investment trust (REIT).
In accordance with its ruling, the arbitration panel awarded the plaintiff $1,220,600.00 in financial compensation from the brokerage firm. The investor brought several different causes of action against National Planning Corporation in this case, including:
The key finding of the arbitration panel was that National Planning Corporation, through a representative, encouraged an investor to place a considerable portion of his retirement savings into a risky REIT. In fact, this REIT held only one building. This investment guidance was wholly unsuitable for this investor, as it over concentrated his holdings and did not properly account for his objectives and risk tolerance.
Other investors have also run into serious problems with real estate investment trusts offered by National Planning Corporation. For example, in November of 2013, an investor took a claim before a FINRA arbitration panel in Minneapolis, Minnesota. The investor asserted several different claims before the panel, including:
This claim related to several transactions involving in REITs that were done in conjunction with the firm Waterway Holdings Group, LLC. According to the claimants, National Planning Corporation and the other defendants materially misrepresented the investments, manipulating the investors into taking on a tremendous amount of real estate debt. After reviewing the claim, the FINRA arbitration panel agreed with the investor’s argument, awarding them $6,157,884.00 in financial compensation.
To offer securities to retail investors, brokers and brokerage firms must be properly registered with all appropriate regulatory bodies. When firms fail to follow these protocols, innocent investors are put at financial risk. In January of 2007, the Florida Department of Financial Services discovered that multiple National Planning Corporation representatives were selling securities from unregistered locations in Florida to state residents. Florida regulators immediately sent a cease and desist letter to the firm, and issued a $172,000 fine.
Unregistered representatives and unregistered financial products are often issues in fraud claims. When products are not properly registered, the risk of fraud increases dramatically. If you lost money investing with an unregistered person, or if you were improperly sold unregistered securities, you should consult with an experienced investment fraud attorney immediately. You may have been the victim of securities fraud.
In September of 2005, regulators at the National Association of Securities Dealers (NASD), the forerunner to FINRA, discovered that several brokerage firms were involved in a scheme that violated the industry’s anti-reciprocal rules.
NASD investigators found that National Planning Corporation, along with six other brokerage firms, had entered into unlawful revenue sharing plans with a large mutual fund. In exchange for a fee, National Planning Corporation granted the mutual funds preferential marketing status, and better access to its clients.
For example, when a mutual fund gave National Planning Corporation a financial benefit, the firm then returned the favor by giving that mutual fund a better marketing position on its website. In some cases, National Planning Corporation even directly distributed marketing material to brokers in exchange for an illicit benefit. This type of arrangement is a clear violation of the securities industry’s rules against reciprocal agreements.
Registered brokerage firms should only give an advantage to certain mutual funds on the grounds that those funds are truly in the best interests of the firm’s customers. Broker-dealers should never recommend a fund because the firm is getting a financial benefit. This taints the investment advice and puts investors at risk. Without admitting to or denying the misconduct, National Financial Planning Corporation agreed to pay a fine of $1,308,000.
At Sonn Law Group, we are proud to advocate for investors throughout the United States. If you or a family member lost money due to broker negligence or fraud our team is standing by, ready to help. Please do not hesitate to contact our law firm today to set up your free investment fraud consultation. We only collect our legal fees if we help you recover compensation for your damages.