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Regulatory Sanctions

Oppenheimer Ordered to Pay $3.4Mn in Fines and Restitution - FINRA

November 17, 2016

Oppenheimer & Co. agreed to pay $3.425 million in fines and restitution to customers to settle FINRA charges the firm failed to report required information to FINRA, failed to produce documents in discovery to customers who filed arbitrations, and failed to apply applicable sales charge waivers to customers.


FINRA found the following violative actions or procedures:


LATE AND/OR INACCURATE REPORTING.  Over a span of several years Oppenheimer failed to timely report to FINRA more than 350 required filings, including:  (i) securities-related regulatory findings, (ii) disciplinary actions taken by Oppenheimer against its employees, and, (iii) settlements of securities-related arbitration and litigation claims. On average, Oppenheimer made these filings more than 4 years late.


LATE DISCLOSURES INVOLVING EMPLOYEES.   Oppenheimer failed to timely disclose that its then AML Compliance Officer and another employee had received Wells notices from the SEC.  While Oppenheimer had revised its WSPs (supervisory procedures) as a result of a prior FINRA investigation, it had failed to adopt adequate procedures that addressed a specific obligation to report regulatory events involving its employees.


DISCOVERY DOCUMENTS DURING ARBITRATIONS.    Between 2010 and 2013, Oppenheimer failed to produce relevant documents during discovery to 7 arbitration claimants who alleged Oppenheimer failed to supervise former registered rep Mark Hotton. Oppenheimer has paid more than $6 million to resolve customer arbitration claims related to its supervision of Hotton, and was previously ordered to pay an additional $1.25 million to 22 additional customers who suffered losses but had not filed arbitration claims.


MUTUAL FUND SALES CHARGE WAIVERS.    Oppenheimer failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales. The firm relied on its FA’s to determine the applicability of sales charge waivers without having adequately assisted them in making this determination.