Oppenheimer Fined for Reporting and FINRA Discovery Violations

FINRA fined Oppenheimer & Co. Inc. (CRD# 249) and ordered the firm to pay retribution in an amount totaling $3.4 million for failing to produce documents in discovery to customers who filed FINRA arbitrations and for not applying applicable sales charge waivers to customers.

According to the news release, FINRA found that over a span of several years, Oppenheimer failed to timely report to FINRA more than 350 required filings including securities-related regulatory findings, disciplinary actions taken by Oppenheimer against its employees, and settlements of securities-related arbitration and litigation claims. On average, according to FINRA, Oppenheimer made these filings more than four years late.

In addition to those allegations, FINRA found that between 2010 and 2013, Oppenheimer failed to produce relevant documents during discovery to seven FINRA arbitration claimants alleging Oppenheimer failed to supervise former Oppenheimer broker Mark C. Hotton (CRD# 2346843). Oppenheimer failed to provide spreadsheets showing that Hotton had excessively traded multiple customer accounts.

“We applaud FINRA’s regulatory actions to strengthen the FINRA arbitration process,” said Scott Silver, who regularly represents customers at FINRA or other securities arbitration hearings. “It is incredibly frustrating when a brokerage firm acts in bad faith and hides documents during arbitration. FINRA’s actions serve as a strong reminded to firms and FINRA arbitrators that discovery abuse should not be tolerated.”

Hotton, no longer in the industry, has 31 disclosures on his FINRA BrokerCheck report, many of which are FINRA arbitrations that have settled. In total, Oppenheimer has paid more than $6 million to resolve FINRA arbitration claims related to its supervision of Hotton.

In settling the matter with FINRA, Oppenheimer neither admitted nor denied the charges but consented to the entry of FINRA’s findings.

FINRA’s BrokerCheck is a great tool for investors to use to get background information on broker and brokerage firms. BrokerCheck lists certain items as “disclosure events.” These disclosure events can be FINRA arbitrations or civil litigations, criminal actions, judgments and liens, discharges and terminations from member firms, and regulatory actions by FINRA, the SEC, or another state.

The most important part of the BrokerCheck tool is that firms report the information. Without that, the tool is null and useless. With allegations that the information was filed up to four years late, sometimes the damage has already been done.

If you have invested with Oppenheimer & Co. and/or Mark C. Hotton and have lost money doing so, you may be able to recover some or all of your losses. Our lawyers are experienced in recovering investor losses due to broker and brokerage firm misconduct through FINRA arbitration.

Silver Law Group represents the interests of investors who have been the victims of investment fraud. If you have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.