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- Chicago-Based Investment Adviser Sentenced to 151 Months in Prison - SEC
- Dun & Bradstreet Hit With FCPA Violations - SEC
- SEC Charges Additional Defendant in Fraudulent ICO Scheme
- Warren Buffett Simply Blew it on Wells Fargo Stock: Dick Bove (Video)
- Barclays and Deutsche Bank to Lag U.S. Trading Peers
- NY AG Schneiderman Seeks to Close Loophole That Could Let Trump Pardons Block State Charges
- 'Fearless Girl' is Moving to NYSE After Year Staring Down 'Charging Bull'
- What's In Your Wallet - American Express Shares Soar After Earnings Release
- Deutsche Bank's Executive Departures Continue Following Change in CEO
- Reflections of an Economist Commissioner (SEC's Piwowar)
- Billionaire HF Manager and The Fed Chair Runner-Up are Investing in New Cryptocurrency
- Court Finds 2 Brokers Liable for Fraud Involving Mortgage-Backed Securities
- One FINRA: An Organization’s Commitment to Diversity and Inclusion
- 2018 GASB Accounting Support Fee to Fund the Governmental Accounting Standards Board
- Barclays Eyes Move Into Cryptocurrency Trading
- Goldman Breaks From Wall Street Pack with Bond-Trading Boom
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WWW: Retail B/D Pays $498K for Selling Unsuitable UITs - FINRA
CUSO Financial Services, a general securities firm based in San Diego, CA, agreed to pay $173K in fines and restitution to settle FINRA charges that a registered rep (RR or broker) recommended and sold unsuitable unit investment trusts (UITs) to customers unit investment trusts (UITs). The firm had earlier provided $325K in restitution to customers – so the firm’s total cost in this matter totaled $498K.
ABOUT THE FIRM. CUSO, a FINRA member since 1997, conducts a general securities business through its relationships with credit unions. Currently, the Firm has about 714 registered reps and over 950 branch offices located in credit unions across the country. CUSO does not have any prior disciplinary history.
FINRA’S SPECIFIC FINDINGS. From January 2012 through August 2013, the RR solicited and sold to 50 customers 76 UITs that invested in closed-end mutual funds that employed leverage. The RR and his principals who approved the UIT transactions, failed to have a reasonable basis to recommend and approve the UIT transactions. Some of the customers were seniors, and some of these customers had low risk tolerances.
All told, the customers lost $443,000 of the $4.6 million invested.
While CUSO’s written supervisory procedures (WSPs) directed certain principals to review UIT transactions for suitability, the WSPs lacked concrete guidance to assist its brokers and principals in assessing the suitability of UITs that invest in closed-end funds and that might use leverage – e.g., no concrete guidance as to how a customer’s age, liquid net worth and asset concentration impacted the suitability determination for these riskier UITs.
This case was reported in FINRA Disciplinary Actions for March 2017.
For details on this case, go to … FINRA Disciplinary Actions Online, and refer to Case #2013039239102.