Failure To Supervise Law Firm

Did You Suffer Investment Losses Because of a Failure To Supervise By Your Broker? Newbridge Securities Agrees To Pay $105K in FINRA Settlement

If you sustained significant portfolio losses while working with a broker-dealer, and you wonder whether you were the victim of failure to supervise by the firm, contact Shepherd Smith Edwards and Kantas Failure To Supervise Law Firm (investorlawyers.com). We can help you assess the cause of your losses and explore your legal options.

Failure to supervise is the term used to refer to when your broker-dealer does not fulfill its duty of care to properly monitor not just its financial advisors but also their activities in customers’ accounts. When this breach of fiduciary duty enables broker misconduct, fraud, or negligence to happen, and serious investment losses, the investor who was harmed may be able to sue for damages.

The broker-dealer also may also be subject to penalties and/or sanctions by regulators, which is what recently happened with Newbridge Securities Corp. Without denying or admitting to the findings, the independent brokerage firm agreed to pay a $105K penalty for its purported inadequate supervision of advisors that allegedly unsuitably recommended margin use to certain retail clients. The penalty Newbridge is paying includes a $60K fine and $45K restitution plus interest.

The customers involved were unsophisticated investors who did not understand the degree to which margin would be used in their accounts or the associated cost involved. All of the accounts ended up sustaining losses, including those that occurred because of margin calls. The Financial Industry Regulatory Authority (FINRA) found that while the purported extensive use of margin enabled customers to buy more securities than if they had paid for them in full, it also allowed Newbridge Securities brokers to earn more in commissions.

This is not the first time Newbridge Securities has been sanctioned over alleged failure to supervise violations.

What Should An Investor Know About A Failure To Supervise Claim?

This is not the kind of securities case you should pursue without seasoned failure to supervise attorneys by your side. Because you probably signed a predispute arbitration clause when you agreed to work with your broker-dealer, this type of claim will likely have to be brought in FINRA arbitration.

To have grounds for a failure to supervise claim, there needs to be a securities law violation, a registered representative who committed the alleged violation, a brokerage firm who has supervisory jurisdiction over that individual, and the failure by that firm or its supervisory staff to reasonably oversee this financial advisor.

Failure to supervise can happen when the broker-dealer neglects to detect any red flags indicating something was amiss, ignores any noticed red flags, or doesn’t have a supervisory system, policies, or procedures in place to identify or act when there are red flags.

Contact Our Knowledgeable Failure To Supervise Law Firm 

For over 30 years, our failure to supervise lawyers have been representing retail investors, high-net-worth investors, and institutional investors in recouping the damages they are owed. More than 90% of our clients have received full or partial financial recovery with the help of our FINRA law firm.

Call (800) 259-9010 or fill out this form.