FINRA Orders Oppenheimer to Pay $3.4M Penalty For Alleged Reporting Failures and Not Giving Discounts to Mutual Fund Clients

The Financial Industry Regulatory Authority says that Oppenheimer & Co. (OPY) must pay $3.4M in sanctions. According to the regulator, for eight years the firm was about four years late when submitting 365 filings about disciplinary actions that it brought against its brokers and in arbitration and litigation settlements. FINRA is also accusing Oppenheimer of not giving seven claimants the documentation they needed in their arbitration against Mark Hotton, an ex-registered representative, and of overcharging 825 customers more than $1M collectively for mutual fund shares over a six-year period.

The self-regulatory organization claims that the late filings to FINRA took place between 2008 and 2016 and that Oppenheimer failed to provide claimants the documentation related to the Mark Hotton allegations between 2010 and 2013. The failure to apply the appropriate fee waiver discount for mutual fund shares purportedly occurred between 2009 and 2015.

Already, Oppenheimer has paid over $6M to settle customer disputes alleging inadequate supervision of Hotton and another $1.25M to 22 customers who did not file arbitration cases but suffered losses, too. Oppenheimer also was ordered to pay a $2.5M fine to FINRA last year over the Hotton claims. The former broker, whom FINRA permanently barred from the securities industry three years ago, was sentenced sentenced to 11 years in prison for stealing client monies and excessively trading their brokerage accounts.

Although Oppenheimer is settling with FINRA again, it is not denying or admitting to the regulator’s latest charges. Of the $3.4M, $1.575M is a fine and over $703K will be paid to claimants who have brought arbitration complaints. More than $1.142M will go to mutual fund customers. The firm announced that it has modified its own systems to tackle the issues addressed in FINRA’s enforcement action, including: personnel-related enhancements, better procedures, policies, and controls, and technological initiatives to prevent reporting problems in the future.

Our broker misconduct lawyers and investment adviser fraud attorneys represent investors throughout the US. Contact Shepherd Smith  Edwards and Kantas, LTD LLP today.

FINRA Sanctions Oppenheimer % Co. $3.4M for Reporting Violations, Failing to Comply with Discovery Obligations in Arbitrations, and Other Supervisory Failures, FINRA, November 17, 2016

Letter of Settlement in FINRA’s 2015 Case Against Oppenheimer (PDF)

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