It is always important for investors to have a good understanding of the financial professionals they work with. Before handing over money to anyone, brokers should be vetted properly. This is why the Financial Industry Regulatory Authority (FINRA) created its BrokerCheck reports.
Not only do these provide good information on where brokers are licensed and their work histories, but they also reveal customer disputes, discharges, and alleged improper activity. But these reports don’t just cover brokers – they also include their member firms.
What investors should know about National Securities Corporation
For more than 70 years, National Securities Corporation has been operating in the U.S. Today, the company has offices and brokers in every state. National also has numerous disclosures on its BrokerCheck report. A phrase that shows up repeatedly in the report is “failure to supervise,” which means the actions of brokers weren’t being monitored according to securities industries regulations. Just as a broker is responsible for following the rules, so are firms – along with making sure their brokers do it.
Previously, we chronicled other National Securities Corporation issues, including those related to Puerto Rican Junk bonds and employees who were alleged to have engaged in unethical business practices. As a result of these reported infractions and others – including violations of SEC and Nasdaq regulations – National has had to pay thousands in fines over the years.
An issue we discussed recently concerned biotech companies. Last year, an analyst with National reportedly recommended three biotech companies to investors. The problem was that each of them is owned by Fortress Biotech, Inc., which now owns a controlling stake in National’s parent company. This obvious conflict of interest is currently being investigated by the SEC.
A problem with brokers
According to a report from Rueters, about 30 percent of National’s brokers have disclosures on their record that include personal financial problems and regulatory issues. This is about three times more than the average at financial firms.
One broker mentioned in the report is Mike McMahon. A former client of his alleges that McMahon bought or sold shares of Apple nine times in one year, which earned the broker almost $30,000 in fees. Buying or selling stock in order to generate fees is called churning, which violates FINRA rules. Also while working at National, McMahon was involved in three other customer complaints, two of which were settled for a total of more than $300,000 in damages. Altogether, McMahon’s BrokerCheck report reveals 16 disclosures with allegations of misrepresentation, negligence, and breach of fiduciary duty.
Kyle Harrington started working for National in July of 2012. He was fired from the firm in November of 2016 after an “Internal Review regarding the appearance of conversion of client funds,” according to his BrokerCheck report. While with National Securities, Harrington was involved in three customer disputes, two of which were settled. The third – which alleged negligent misrepresentation and breach of fiduciary duty – went to FINRA arbitration, in which Harrington’s former client was awarded $105,000 in damages and another $50,000 in legal fees.
How does FINRA arbitration work?
Instead of filing a lawsuit against a broker, investors have the choice of using FINRA arbitration in an attempt to recover lost money. The process involves an independent third party who hears both sides of the dispute and then renders his or her decision. By choosing arbitration, the parties give up their right to go to court. The advantage, however, is that this option is often less expensive than going to court and the results often come quicker.
Want to file a FINRA claim?
If you are looking to get back money lost due to misconduct by a broker at National Securities Corporation or any other firm, the Silver Law Group can help you with your FINRA claim. We can also give you more information on the arbitration process and will be with you every step of the way.
To speak with an experienced securities arbitration attorney, call us at 800-975-4345 or reach us through our online contact form. The Silver Law Group works on contingency, so you won’t owe us a fee unless you recover money.