SEC’s Office of Compliance Inspections and Examinations Identifies Frequent Advisor and Brokerage Firm Shortcomings
Starr Austen & Miller has represented over a thousand victims of either investment advisor negligence or stockbroker fraud. In almost every case the guilty advisor or broker failed to comply with his firm’s own compliance manual. Typically, such conduct has been ongoing for years and the brokerage firm has chosen to pay lip service to its compliance rules and procedures by not truly watching its broker with sufficient care or otherwise properly supervising the broker’s bad conduct. In essence, the compliance manual becomes a worthless piece of paper the brokerage firm shows the regulators in an effort to show that it is taking compliance seriously, when, in reality, these compliance rules and procedures are simply not enforced with sufficient rigor to cause the sales team to follow the rules.
On February 7, 2017, the SEC’s Office of Compliance Inspections and Examinations issued a report which is both telling and confirmatory of what the Starr Austen & Miller stock fraud team has seen for many years. In essence, bad brokers are able to victimize their clients primarily because of three things:
- The advisor does not follow his firm’s compliance policies and procedures;
- The firm’s annual reviews are not performed or otherwise fail to discover the advisor’s bad acts (i.e. lack of supervision); or
- The compliance manuals are not sufficiently tailored to clearly address the advisor’s business practices.
Whenever an action is brought against a brokerage firm for its advisor’s bad acts, the brokerage firm almost always contends that it could not reasonably discover the actions of its “rogue broker”. This is almost always BS! The attached report of the SEC’s Office of Compliance Inspections and Examinations bears this out.
Starr Austen & Miller devotes a large portion of its practice to representing the victims of investment advisor negligence and stockbroker fraud. If you or a loved one has been victimized by the unscrupulous actions of either a broker and investment advisor, contact Starr Austen & Miller for a free, no obligation consultation.