If you have ever invested with National Securities Corporation (CRD#: 7569), you need to be aware of the history of complaints that have been brought against this broker-dealer. National Securities Corporation is based in Seattle, Washington, and the firm is licensed to operate in 53 U.S. states and American territories.
In June of 2017, Reuters released the results of a comprehensive investigative report focusing on broker-dealers that currently employ a high concentration of brokers who had red flags on their record with FINRA. National Securities Corporation was included on this list, with Reuters finding that 34.6 percent of the company’s 714 brokers had at least one piece of negative information on their record.
Investors need to know that their money is safe and that they are investing with a reputable, reliable brokerage firm. At Sonn Law Group, our top-rated securities fraud attorneys are committed to advocating for the rights of investors. Here, we highlight the history of customer complaints brought against National Securities Corporation and its brokers.
Misconduct By National Securities Corporation
Breach of Fiduciary Duty and Broker Negligence
On December 6th, 2016, a FINRA arbitration panel found against this brokerage and one of its representatives in a breach of fiduciary duty case. This case was related to a National Securities Corporation customer’s purchase of a large number of shares in a company called Islet Sciences. Notably, this was a penny stock.
The investor in the case claimed that a National Securities Corporation broker negligently misrepresented the penny stock investment opportunity. The FINRA arbitration panel agreed with this investor, awarding him $155,000 in financial compensation.
Churning and Unauthorized Trading
In February of 2015, National Securities Corporation broker John Joseph Labarca (CRD#: 2030473) was permanently barred from the securities industry for committing serious misconduct, including failing to produce requested documents and failing to cooperate with FINRA investigators and enforcement staff.
While employed as a broker at National Securities Corporation, Mr. Labarca was based in an office in Houston, Texas. During that time, an investor accused him of making unauthorized trades and churning his brokerage account. The dispute went before a FINRA arbitration panel, which found in favor of the investor, awarding him $504,443.04 in total compensation.
Brokerage firms have a legal duty to ensure that all of their representatives are only recommending suitable investments to their customers. To ensure that an investment opportunity is truly appropriate for a specific investor, a broker must make a proactive effort to obtain that investor’s risk profile and to fully understand their needs and desires. Then, the broker must use this information whenever working with that customer.
Unfortunately, National Securities Corporation brokers have not always lived up to this legal duty. For example, in a case that was decided in December of 2013, a FINRA arbitration panel awarded a Colorado-based investor more than $219,000 in damages for losses related to a National Securities Corporation broker’s recommendations that she put her money into some unsuitable mutual funds.
A Failed High-Risk Private Placement
A private placement is the sale of securities directly to qualified private investors, instead of through an ordinary public offering. Private placements offer some important advantages in certain situations, as they are exempt from some Securities and Exchange Commission (SEC) regulations.
That being said, private placements must be done in a very particular way to ensure that investors are properly protected. These investments are notoriously risky. As such, it is especially important that brokers and broker-dealers conduct proper due diligence before making any recommendations.
In 2011, National Securities Corporation was publicly censured and ordered to pay $175,000 in restitution to affected investors for its misconduct related to a failed private placement. Even with private placements, brokerage firms still have a legal duty to ensure that the specific investment in question is suitable for any of their clients that they are pushing it on.
In this case, FINRA investigators found that the firm failed to properly protect the best interests of its clients because its brokers recommended a very high-risk private placement to investors who had no business being in such an investment in the first place.
Contact Our Securities Fraud Attorneys Today
At Sonn Law Group, our securities lawyers fiercely advocate for the legal rights and financial interests of wronged investors. If you lost a substantial amount of money investing with National Securities Corporation, please call us today at 844-689-5754 for your free initial consultation. From our main office in South Florida, we represent fraud victims nationwide.