Currently, the top-rated investment fraud attorneys at Sonn Law Group are investigating any and all claims against Next Financial Group.
Under securities industry rules and regulations, brokerage firms have an obligation to put in place a proper supervisory system to oversee the conduct of all of their representatives. Unfortunately, in several different cases, Next Financial Group failed to live up to this responsibility.
The most recent example of this comes from January of 2016. Upon investigation into the firm’s practices, FINRA’s Department of Enforcement found that Next Financial Group lacked the appropriate supervisory system to ensure that customers were being granted all available discounts on sales charges.
As a result, some of the firm’s clients were repeatedly overcharged, and FINRA took action against the brokerage firm, issuing a fine of $125,000 and ordering the firm to pay more than $216,000 in financial restitution.
In December of 2014, FINRA’s Department of Market Regulation investigated Next Financial Group for allegedly manipulating the price of certain securities. More specifically, this case involved transactions in which sales took place between the company’s own account and the accounts of its client.
During the review period, FINRA found 19 different transactions in which the brokerage gave its clients an unfair price, thereby benefiting the firm. Without admitting to or denying the allegations of misconduct, Next Financial Group agreed to penalties that included a fine of $265,000 and payment of $177,170.01 in financial restitution to the affected customers.
In December of 2011, the New Hampshire Bureau of Securities sent a cease and desist letter to Next Financial Group. After receiving a tip, New Hampshire state regulators discovered that one of the broker-dealer’s agents was distributing sales seminar fliers and other marketing materials that contained false information.
Registered brokerage firms are responsible for supervising the professional conduct of all sales and marketing employees. Without admitting to any wrongdoing, Next Financial Group consented to the sanctions, which included a fine of $120,000 along with an additional $20,000 in other financial penalties.
In November of 2011, FINRA’s Department of Enforcement found that Next Financial Group was negligent in approving the sale of certain high-risk private placements. A private placement is a type of securities sale that happens outside of the normal offering process.
Private placements are not registered, and can only be offered in very limited circumstances to a limited set of qualified investors. When offering private placements, brokers and brokerage firms have a legal duty to comply with the requirements of FINRA Rule 5123
FINRA determined that Next Financial Group fell far short of these standards. In offering a private placement known as Provident Royalties (which ultimately turned out to be a failed investment) the brokerage firm ignored many red flags and adverse information, pushing the risky investment on clients.
In all, the firm sold more than $20 million worth of this financial product. As a result of Next Financial Group’s negligence, several investors sustained serious losses. The broker-dealer was ordered to pay $2,000,000 in financial restitution to these customers.
Additionally, as this violation was deemed to be especially severe, FINRA temporarily suspended Next Financial Group’s chief executive officer (CEO) and chief compliance officer (CCO). Unfortunately, beyond being risky, private placements are also often conduits for investment fraud.
If you sustained losses in any type of unregistered security or privately offered financial investment, you need to consult with an experienced private placements stockbroker fraud attorney as soon as possible.
In November of 2010, investigators found that Next Financial Group lacked the proper supervisory measures to ensure that its individual securities representatives were not making excessive trades on customer accounts.
Excessive trading, also known as churning, is a very serious problem in the securities industry: it occurs when a broker makes a transaction for the primary purpose of increasing their own fees or commissions. When churning, brokers are not crafting an investment strategy that is in the interests of their client, but instead focusing their attention on increasing their own financial benefit.
Indeed, in effect, churning does nothing more than transfer client money over to the broker in the form of unnecessary and avoidable transaction fees. Brokerage firms have a duty to ensure that representatives are always acting in the best interests of investors.
One aspect of this duty is to put a system in place that limits the risk of individual broker misconduct. As Next Financial Group failed to put the proper system in place to detect and stop churning, FINRA fined the firm $400,000 and ordered it to pay full financial restitution plus interest to affected customers.
At Sonn Law Group, our top-rated securities fraud lawyers have helped many investors recover compensation for their losses.
To request your free legal consultation, please contact our team today by calling us at 877-682-6989 or emailing us through our website. Our firm is based in Aventura, and we have locations in Houston, Miami, Atlanta and other cities from which we represent investors in all fifty states and in Puerto Rico.