Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) in an acceptance, waiver, and consent action (AWC) sanctioned Newbridge Securities Corporation (Newbridge) concerning allegations that the firm violated a host of sales obligations to customers that resulted in unfair trading practices.
FINRA found that in ten transactions, Newbridge sold corporate bonds to customers and failed to sell such bonds at a price that was fair taking into consideration all relevant circumstances such as the market conditions for the bonds at the time of the transaction and the expense involved. FINRA also alleged in another 10 transactions for a customer the firm failed to use reasonable diligence to ascertain the best market price and failed to buy or sell in such market so that the price to its customer was as favorable as possible at the time of the transaction. Next, FINRA found a total of at least 50 instances where the firm failed to execute orders fully and promptly.
Further, FINRA alleged that Newbridge executed 32 short sale orders but failed to mark the orders as being sold short. As a result, FINRA found that on 13 occasions the firm effected short sales in an equity security for its own account without borrowing the security or having reasonable grounds to believe that the security could be borrowed so that it could be delivered on the date delivery is due. FINRA also found that the firm, on 63 occasions, provided written notification to customers that failed to disclose information or disclosed inaccurate information. The information that was inaccurate included the correct trade price, the correct execution price(s), the price was exclusive of any commission equivalent, failed to disclose or to accurately disclose the compensation amount(s) charged to the customer, and/or inaccurately disclosed the firm’s compensation type.
FINRA also alleged that Newbridge’s supervisory system did not provide for supervision reasonably designed to achieve compliance with bond execution regulations. FINRA stated that at a minimum adequate written supervisory procedures should describe: (a) specific identification of the individual responsible for supervision; (b) the supervisory steps and reviews to be taken: (c) the frequency of the reviews: and (d) how the reviews should be documented. FINRA found that Newbridge’s supervisory system did not include written supervisory procedures providing for any of these four cited requirements regarding corporate bond best execution.
Investors who have suffered investment losses may be able recover their losses through arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of unsuitable investments and other breaches of brokerage firm’s obligations to the customers. Our consultations are free of charge and the firm is only compensated if you recover.