Archive for January, 2013

FINRA Fines Firms for Failing to Deliver Prospectuses

January 21st, 2013
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On January 2, the Financial Industry Regulatory Authority announced fines totaling over $700,000  against five companies for failure in delivering prospectuses for mutual funds to clients.  The FINRA fines were implemented against LPL Financial, State Farm Management Corp., Scottrade Inc., T. Rowe Price Investment Services, Inc., and Deutsche Bank Securities, Inc.

By law, securities companies are required to deliver prospectuses to their clients so that the clients have an opportunity to review the investment portfolios and past performances of the funds.

The sanctions are the result of a FINRA review period from January 2009 through June 2011. LPL, who over that time period was required to deliver 3.4 million prospectuses to clients, blamed the problem on its brokers but admitted that there were no procedures in place to make sure the documents had been delivered.

FINRA alleged that State Farm, who was responsible for delivering 154,129 prospectuses, also failed due to inadequate supervision of its brokers.

As is the norm in these types of settlements, none of the firms involved admitted guilt in any of FINRA findings.  Of the five firms involved, only LPL released a statement.  Spokesman Betsy Weinberger said that LPL has instituted an automatic prospectus delivery program which she claims would assure that prospectuses are delivered in a timely manner.  None of the other firms released a statement.

At the Carlson Law Firm, we have experienced investment recovery lawyers to help investors when they have been harmed by the deceptive practices of the securities industry.  If you believe you have suffered financial losses through negligence or willful misconduct, contact us online or call (619) 544-9300.

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