Assets under management Growth by Quarter
Quarterly points use the latest ADV filing or SEC roster snapshot available in each quarter.
Total AUM
Total Accounts
10Y AUM Change
Private Funds
Private funds reported by Benjamin F. Edwards & Company, Incorporated
Loading private fund disclosures…
Employee Growth by Quarter
Quarterly points use the latest ADV filing or SEC roster snapshot available in each quarter.
Total Employees
Clients per Employee
10Y Employee Change
Historical AUM and employee figures reflect available SEC Form ADV filings under this CRD. Filing gaps may reflect registration status changes, dormant periods, state registration periods, firm restructuring, or other reporting changes. Rialytix does not interpolate missing periods.
Ownership
Reported direct and indirect ownership ranges
Each range applies to a separate reported relationship and should not be added together.
Reported ownership ranges
Highlighted bands show the percentage range reported in Form ADV.
0%25%50%75%100%
BENJAMIN EDWARDS, INC.Direct owner · Schedule AInterest in BENJAMIN F. EDWARDS & COMPANY, INCORPORATED
75%+
Bars represent the reported range at that individual ownership step, not an estimated percentage of the advisory firm. Indirect relationships may refer to intermediate entities rather than directly to Benjamin F. Edwards & Company, Incorporated.
No indirect ownership information reported in the source’s Schedule B.
Reported ownership and control details
Form ADV · Filing date 2026-09-21 · Schedules A and B
| # | Owner / person & role | Interest in entity | Reported interest | Control person | Title / status acquired | Source |
|---|---|---|---|---|---|---|
| 1 | BENJAMIN FRANKLIN IV EDWARDSCHAIRMAN/CHIEF EXECUTIVE OFFICER, PRESIDENTIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | CHAIRMAN/CHIEF EXECUTIVE OFFICER, PRESIDENT08/2008 | Schedule APDF page 76 |
| 2 | BENJAMIN EDWARDS, INC.OWNERDomestic entity | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | 75% or moreCode E | Yes | OWNER10/2008 | Schedule APDF page 76 |
| 3 | THOMAS HAYDEN JR MARTINDIRECTOR/CHIEF FINANCIAL OFFICERIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR/CHIEF FINANCIAL OFFICER09/2009 | Schedule APDF page 76 |
| 4 | CHRISTOPHER M KELLERDIRECTOR/DIRECTOR OF BUSINESS SERVICESIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR/DIRECTOR OF BUSINESS SERVICES04/2010 | Schedule APDF page 76 |
| 5 | DOUGLAS DAVID RUBENSTEINDIRECTOR/SENIOR ADVISOR TO THE CHAIRMANIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR/SENIOR ADVISOR TO THE CHAIRMAN01/2026 | Schedule APDF page 76 |
| 6 | BILLY JOE WISDOMDIRECTOR/DIRECTOR OF REGULATORY & OVERSIGHT SERVICESIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR/DIRECTOR OF REGULATORY & OVERSIGHT SERVICES01/2015 | Schedule APDF page 76 |
| 7 | CHRISTOPHER MARK WHITINGDIRECTOR OF FINANCIAL STRATEGIES GROUPIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR OF FINANCIAL STRATEGIES GROUP09/2018 | Schedule APDF page 76 |
| 8 | KATELYN CLARE STEVENSCHIEF COMPLIANCE OFFICER, BROKERAGEIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | CHIEF COMPLIANCE OFFICER, BROKERAGE01/2021 | Schedule APDF page 76 |
| 9 | MATTHEW PAUL MUCKLERCHIEF COMPLIANCE OFFICER, ADVISORYIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | CHIEF COMPLIANCE OFFICER, ADVISORY01/2021 | Schedule APDF page 76 |
| 10 | TODD HEINRICH BRANDSTADTDIRECTOR/DIRECTOR OF BRANCHESIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR/DIRECTOR OF BRANCHES01/2025 | Schedule APDF page 76 |
| 11 | BENJAMIN FRANKLIN EDWARDSDIRECTOR/ASSISTANT DIRECTOR OF BRANCHESIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR/ASSISTANT DIRECTOR OF BRANCHES09/2024 | Schedule APDF page 76 |
| 12 | GWENDOLYN MADISON TAYLORDIRECTOR/CHIEF LEGAL COUNSELIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR/CHIEF LEGAL COUNSEL01/2026 | Schedule APDF page 76 |
| 13 | BROOKE DANIELLE EGGLESTONDIRECTOR/CHIEF HUMAN RESOURCE OFFICERIndividual | BENJAMIN F. EDWARDS & COMPANY, INCORPORATED | Less than 5%Code NA | Yes | DIRECTOR/CHIEF HUMAN RESOURCE OFFICER01/2024 | Schedule APDF page 76 |
Less than 5% may include zero. Code F identifies a role without specifying a percentage. Reported interests may overlap and may not include every owner. Total indirect ownership is not calculated.
Compliance & Disclosures
Filing dated 9/21/2026 2:28:22 PM
Responses were selected by the RIA in its filing. Questions are shortened for readability; “you” refers to the reporting firm, and some questions also cover advisory affiliates.
RIA or supervised-person involvementThe RIA reported that one or more events below involve the firm or its supervised persons.RIA responseYes
AFelonies2 No
In the past ten years, have you or any advisory affiliate:
- A1Been convicted of or pleaded guilty or no contest to a felony?No
- A2Been charged with a felony?No
BMisdemeanors2 No
In the past ten years, have you or any advisory affiliate:
- B1Been convicted of or pleaded guilty or no contest to a misdemeanor involving investments, an investment-related business, fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, or extortion?No
- B2Been charged with a misdemeanor of the kind listed above?No
CSEC or CFTC actions4 Yes1 No
Has the SEC or CFTC ever:
- C1Found you or an advisory affiliate made a false statement or omission?Yes
- C2Found you or an advisory affiliate violated SEC or CFTC regulations or statutes?Yes
- C3Found you or an advisory affiliate caused an investment-related business to have its authorization to do business denied, suspended, revoked, or restricted?No
- C4Entered an order against you or an advisory affiliate in connection with investment-related activity?Yes
- C5Imposed a civil money penalty on you or an advisory affiliate, or ordered you or an advisory affiliate to cease and desist from any activity?Yes
DOther regulatory actions2 Yes3 No
Has any other federal regulatory agency, state regulatory agency, or foreign financial regulatory authority ever:
- D1Found you or an advisory affiliate made a false statement or omission, or was dishonest, unfair, or unethical?No
- D2Found you or an advisory affiliate violated investment-related regulations or statutes?No
- D3Found you or an advisory affiliate caused an investment-related business to have its authorization to do business denied, suspended, revoked, or restricted?No
- D4In the past ten years, entered an order against you or an advisory affiliate in connection with investment-related activity?Yes
- D5Denied, suspended, or revoked your or an advisory affiliate’s registration or license, or otherwise prevented association with an investment-related business or restricted activities?Yes
ESelf-regulatory organization actions2 Yes2 No
Has a self-regulatory organization or commodities exchange ever:
- E1Found you or an advisory affiliate made a false statement or omission?No
- E2Found you or an advisory affiliate violated its rules, other than a violation designated as a minor rule violation under an SEC-approved plan?Yes
- E3Found you or an advisory affiliate caused an investment-related business to have its authorization to do business denied, suspended, revoked, or restricted?No
- E4Disciplined you or an advisory affiliate by expulsion, suspension, barring association with other members, or otherwise restricting activities?Yes
FProfessional authorizations1 No
- FHas an authorization to act as an attorney, accountant, or federal contractor granted to you or an advisory affiliate ever been revoked or suspended?No
GPending regulatory proceedings1 No
- GAre you or any advisory affiliate now the subject of a regulatory proceeding that could result in a “Yes” answer to any part of C, D, or E?No
HCivil judicial actions and proceedings4 No
(1) Court actions
Has a domestic or foreign court:
- H(1)(a)In the past ten years, enjoined you or an advisory affiliate in connection with investment-related activity?No
- H(1)(b)Found that you or an advisory affiliate violated investment-related statutes or regulations?No
- H(1)(c)Dismissed, pursuant to a settlement agreement, an investment-related civil action brought against you or an advisory affiliate by a state or foreign financial regulatory authority?No
(2) Pending civil proceedings
- H(2)Are you or any advisory affiliate now the subject of a civil proceeding that could result in a “Yes” answer to any part of H(1)?No
Additional DRP filings 7 source blocks
Verbatim excerpts from supporting DRP filings, which may concern the firm or advisory affiliates. Amounts retain their filed labels; no total or attribution is inferred.
regulatory · block 1PINNELL, MARCY, B.PDF pages 77–79
- Advisory affiliate name — filed text
- PINNELL, MARCY, B.
- Regulator name — filed text
- STATE OF CALIFORNIA DEPARTMENT OF INSURANCE
- How was matter resolved — filed text
- Order
Action status / disposition — filed text
NO FURTHER ACTION NEEDED.
Other filed details
Description of allegations — filed text
BASED SOLELY ON THE ACTIONS TAKEN BY FINRA IN JUNE 2014, THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE HAS ISSUED THE ORDER OF SUMMARY REVOCATION AND ISSUANCE OF RESTRICTED LICENSE.
Sanction detail — filed text
ISSUANCE OF RESTRICTED LICENSE
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE CRD Number: 4264944 This advisory affiliate is a Firm an Individual Registered: Yes No Name: PINNELL, MARCY, B. (For individuals, Last, First, Middle) This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) STATE OF CALIFORNIA DEPARTMENT OF INSURANCE 2. Principal Sanction: Other Other Sanctions: REVOCATION AND ISSUANCE OF RESTRICTED LICENSE 3. Date Initiated (MM/DD/YYYY): 12/08/2015 Exact Explanation If not exact, provide explanation: THE ORDER OF SUMMARY REVOCATION AND ISSUANCE OF RESTRICTED LICENSE IS NOT DATED; HOWEVER, THE DECLARATION OF SERVICE IS DATED 12/8/15. I WAS NOT AWARE OF THIS MATTER UNTIL I RECEIVED THIS ORDER ON 12/11/15 VIA CERTIFIED MAIL. 4. Docket/Case Number: LCB 1681-A 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): EDWARD JONES 6. Principal Product Type: Annuity(ies) - Fixed Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): BASED SOLELY ON THE ACTIONS TAKEN BY FINRA IN JUNE 2014, THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE HAS ISSUED THE ORDER OF SUMMARY REVOCATION AND ISSUANCE OF RESTRICTED LICENSE. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Order 11. Resolution Date (MM/DD/YYYY): 12/08/2015 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: ISSUANCE OF RESTRICTED LICENSE Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: ISSUANCE OF RESTRICTED LICENSE 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided). NO FURTHER ACTION NEEDED.
regulatory · block 2SWART, ANTHONY, KEVINPDF pages 79–81
- Advisory affiliate name — filed text
- SWART, ANTHONY, KEVIN
- Regulator name — filed text
- MICHIGAN
- How was matter resolved — filed text
- Other
Action status / disposition — filed text
STIPULATION AND ORDER FOR WITHDRAWAL REQUIRED WITHDRAWAL OF THE REGISTRATION REQUEST IN MICHIGAN.
Other filed details
Description of allegations — filed text
THE DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS FOR THE STATE OF MICHIGAN HAS ISSUED A NOTICE OF INTENT TO DENY, CONDITION, OR LIMIT THE SECURITIES AGENT'S REGISTRATION APPLICATION IN THE STATE OF MICHIGAN UNDER SECTION 412(1) OF THE SECURITIES ACT, MCL 451.2412(1), FOR THE REASONS SET FORTH IN THE NOTICE.
Sanction detail — filed text
STIPULATION AND ORDER FOR WITHDRAWAL
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE CRD Number: 2376424 This advisory affiliate is a Firm an Individual Registered: Yes No Name: SWART, ANTHONY, KEVIN (For individuals, Last, First, Middle) This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) MICHIGAN 2. Principal Sanction: Other Other Sanctions: NOTICE OF INTENT TO DENY, CONDITION, OR LIMIT AGENT REGISTRATION APPLICATION 3. Date Initiated (MM/DD/YYYY): 06/14/2018 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: 336358 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): BENJAMIN F. EDWARDS 6. Principal Product Type: No Product Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): THE DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS FOR THE STATE OF MICHIGAN HAS ISSUED A NOTICE OF INTENT TO DENY, CONDITION, OR LIMIT THE SECURITIES AGENT'S REGISTRATION APPLICATION IN THE STATE OF MICHIGAN UNDER SECTION 412(1) OF THE SECURITIES ACT, MCL 451.2412(1), FOR THE REASONS SET FORTH IN THE NOTICE. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Other 11. Resolution Date (MM/DD/YYYY): 09/25/2018 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: STIPULATION AND ORDER FOR WITHDRAWAL Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: STIPULATION AND ORDER FOR WITHDRAWAL 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided). STIPULATION AND ORDER FOR WITHDRAWAL REQUIRED WITHDRAWAL OF THE REGISTRATION REQUEST IN MICHIGAN.
regulatory · block 3PDF pages 81–83
- Regulator name — filed text
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION
- How was matter resolved — filed text
- Order
Action status / disposition — filed text
RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THE FOREGOING, THE COMMISSION DEEMS IT APPROPRIATE IN THE PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO IN THE RESPONDENT'S OFFER. ACCORDINGLY, IT IS ORDERED THAT RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $3,151,205.81 AND PREJUDGMENT INTEREST OF $294,058.93, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. RESPONDENT SELF-REPORTED TO THE COMMISSION THE VIOLATIONS DISCUSSED IN THIS ORDER PURSUANT TO THE DIVISION OF ENFORCEMENT'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE ("SCSD INITIATIVE"). ACCORDINGLY, THIS ORDER AND RESPONDENT'S OFFER ARE BASED ON THE INFORMATION SELF- REPORTED BY RESPONDENT.
Other filed details
Description of allegations — filed text
IA RELEASE 40-5151 / MARCH 11, 2019: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED AGAINST BENJAMIN F. EDWARDS & CO., INC. ("RESPONDENT"). ON THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF BREACHES OF FIDUCIARY DUTY AND INADEQUATE DISCLOSURES BY THE RESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARE CLASS SELECTION PRACTICES AND THE FEES IT RECEIVED. AT TIMES DURING THE RELEVANT PERIOD, RESPONDENT PURCHASED, RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE. RESPONDENT RECEIVED 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS. RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OR OTHERWISE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES THAT PAY SUCH FEES. DURING THE RELEVANT PERIOD, RESPONDENT RECEIVED 12B-1 FEES FOR ADVISING CLIENTS TO INVEST IN OR HOLD SUCH MUTUAL FUND SHARE CLASSES. AS A RESULT OF THE CONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS 206(2) AND 207 OF THE ADVISERS ACT.
Sanction detail — filed text
THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $3,151,205.81 AND PREJUDGMENT INTEREST OF $294,058.93, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an
INITIAL OR
AMENDED response used to report details for affirmative responses to Items 11.C., 11.D.,
11.E., 11.F. or 11.G. of Form ADV.
Regulatory Action
Check item(s) being responded to:
11.C(1)
11.C(2)
11.C(3)
11.C(4)
11.C(5)
11.D(1)
11.D(2)
11.D(3)
11.D(4)
11.D(5)
11.E(1)
11.E(2)
11.E(3)
11.E(4)
11.F.
11.G.
Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File
with a completed Execution Page.
One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the
same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP.
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
You (the advisory firm)
You and one or more of your advisory affiliates
One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name).
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box.
ADV DRP - ADVISORY AFFILIATE
No Information Filed
This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser.
This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is
registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the
adviser's or advisory affiliate's favor.
If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item
11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any
event listed in Item 11 that occurred more than ten years ago.
This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the
circumstances:
B.
If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to
the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided.
Yes
No
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records.
PART II
1. Regulatory Action initiated by:
SEC
Other Federal
State
SRO
Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
2.
Principal Sanction:
Other Sanctions:
3.
Date Initiated (MM/DD/YYYY):
03/11/2019
Exact
Explanation
If not exact, provide explanation:
4.
Docket/Case Number:
3-19054
5.
Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable):
6.
Principal Product Type:
Mutual Fund(s)
Other Product Types:
7.
Describe the allegations related to this regulatory action (your response must fit within the space provided):
IA RELEASE 40-5151 / MARCH 11, 2019: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT
PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED AGAINST BENJAMIN F. EDWARDS & CO., INC. ("RESPONDENT"). ON
THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF BREACHES OF FIDUCIARY
DUTY AND INADEQUATE DISCLOSURES BY THE RESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARE CLASS SELECTION PRACTICES AND THE
FEES IT RECEIVED. AT TIMES DURING THE RELEVANT PERIOD, RESPONDENT PURCHASED, RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL
FUND SHARE CLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE
ELIGIBLE. RESPONDENT RECEIVED 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS. RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OR
OTHERWISE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES
THAT PAY SUCH FEES. DURING THE RELEVANT PERIOD, RESPONDENT RECEIVED 12B-1 FEES FOR ADVISING CLIENTS TO INVEST IN OR HOLD SUCH
MUTUAL FUND SHARE CLASSES. AS A RESULT OF THE CONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS 206(2) AND 207 OF THE ADVISERS ACT.
8.
Current Status?
Pending
On Appeal
Final
9.
If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved:
Order
11. Resolution Date (MM/DD/YYYY):
03/11/2019
Exact
Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
Monetary/Fine Amount: $
Revocation/Expulsion/Denial
Disgorgement/Restitution
Censure
Cease and Desist/Injunction
Bar
Suspension
B.
Other Sanctions Ordered:
UNDERTAKINGS AND PREJUDGMENT INTEREST
Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal,
Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to
requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion
of penalty was waived:
THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS
206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $3,151,205.81 AND PREJUDGMENT INTEREST
OF $294,058.93, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT.
13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response
must fit within the space provided).
RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THE FOREGOING, THE
COMMISSION DEEMS IT APPROPRIATE IN THE PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO IN THE RESPONDENT'S OFFER. ACCORDINGLY,
IT IS ORDERED THAT RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF
SECTIONS 206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $3,151,205.81 AND PREJUDGMENT
INTEREST OF $294,058.93, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. RESPONDENT SELF-REPORTED
TO THE COMMISSION THE VIOLATIONS DISCUSSED IN THIS ORDER PURSUANT TO THE DIVISION OF ENFORCEMENT'S SHARE CLASS SELECTION
DISCLOSURE INITIATIVE ("SCSD INITIATIVE"). ACCORDINGLY, THIS ORDER AND RESPONDENT'S OFFER ARE BASED ON THE INFORMATION SELF-
REPORTED BY RESPONDENT.regulatory · block 4HAJRA, DEBASISHPDF pages 83–85
- Advisory affiliate name — filed text
- HAJRA, DEBASISH
- Regulator name — filed text
- FINRA
- Monetary/Fine Amount — filed text
- $ 5,000.00
- How was matter resolved — filed text
- Acceptance, Waiver & Consent(AWC)
Action status / disposition — filed text
THIS MATTER IS NOW CLOSED.
Other filed details
Description of allegations — filed text
WITHOUT ADMITTING OR DENYING THE FINDINGS, HAJRA CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT HE EFFECTED NINE UNAUTHORIZED TRADES IN A DECEASED CUSTOMER'S ACCOUNT. THE FINDINGS STATED THAT THIS MATTER ORIGINATED FROM THE UNIFORM TERMINATION NOTICE FOR SECURITIES INDUSTRY REGISTRATION (FORM U5) FILING BY HAIRA'S MEMBER FIRM THAT STATED HE HAD BEEN TERMINATED FOR MAKING TRADES IN A CUSTOMER'S ACCOUNT, BASED UPON PRIOR VERBAL AUTHORIZATION, WHILE UNAWARE THAT THE CLIENT HAD DIED. THE FINDINGS ALSO STATED THAT THE CUSTOMER AUTHORIZED HAIRA TO MAKE SEVERAL TRADES IN HER ACCOUNT, BUT HE HAD NOT EFFECTUATED ANY OF THE TRADES AT THE TIME OF HER DEATH. AFTER THE CUSTOMER'S DEATH, HAIRA BEGAN EXECUTING THE TRANSACTIONS. THE TOTAL VALUE OF THE TRANSACTIONS WAS $526,966.
Sanction detail — filed text
30 DAY SUSPENSION OF ALL ACTIVITIES. START DATE 09/20/2021. END DATE 10/19/2021. $5000 PENALTY WAS PAID 09/08/2021.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE CRD Number: 2212337 This advisory affiliate is a Firm an Individual Registered: Yes No Name: HAJRA, DEBASISH (For individuals, Last, First, Middle) This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) FINRA 2. Principal Sanction: Suspension Other Sanctions: 3. Date Initiated (MM/DD/YYYY): 08/20/2021 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: 2019064919301 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): WELLS FARGO CLEARING SERVICES, LLC 6. Principal Product Type: Unit Investment Trust(s) Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): WITHOUT ADMITTING OR DENYING THE FINDINGS, HAJRA CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT HE EFFECTED NINE UNAUTHORIZED TRADES IN A DECEASED CUSTOMER'S ACCOUNT. THE FINDINGS STATED THAT THIS MATTER ORIGINATED FROM THE UNIFORM TERMINATION NOTICE FOR SECURITIES INDUSTRY REGISTRATION (FORM U5) FILING BY HAIRA'S MEMBER FIRM THAT STATED HE HAD BEEN TERMINATED FOR MAKING TRADES IN A CUSTOMER'S ACCOUNT, BASED UPON PRIOR VERBAL AUTHORIZATION, WHILE UNAWARE THAT THE CLIENT HAD DIED. THE FINDINGS ALSO STATED THAT THE CUSTOMER AUTHORIZED HAIRA TO MAKE SEVERAL TRADES IN HER ACCOUNT, BUT HE HAD NOT EFFECTUATED ANY OF THE TRADES AT THE TIME OF HER DEATH. AFTER THE CUSTOMER'S DEATH, HAIRA BEGAN EXECUTING THE TRANSACTIONS. THE TOTAL VALUE OF THE TRANSACTIONS WAS $526,966. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Acceptance, Waiver & Consent(AWC) 11. Resolution Date (MM/DD/YYYY): 08/20/2021 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ 5,000.00 Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: 30 DAY SUSPENSION OF ALL ACTIVITIES. START DATE 09/20/2021. END DATE 10/19/2021. $5000 PENALTY WAS PAID 09/08/2021. 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided). THIS MATTER IS NOW CLOSED.
regulatory · block 5PDF pages 85–87
- Regulator name — filed text
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION
- Monetary/Fine Amount — filed text
- $ 650,000.00
- How was matter resolved — filed text
- Order
Action status / disposition — filed text
BENJAMIN EDWARDS HAS SUBMITTED AN OFFER OF SETTLEMENT, WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. BENJAMIN EDWARDS WILLFULLY VIOLATED SECTION 206(4) AND RULE 206(4)-7 THEREUNDER. ACCORDINGLY, IT IS HEREBY ORDERED THAT BENJAMIN EDWARDS CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; IS CENSURED FOR FAILING REASONABLY TO SUPERVISE WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT AND SECTION 203(E) OF THE ADVISERS ACT AND FOR ITS WILLFUL VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; AND SHALL PAY DISGORGEMENT OF $31,417.62, PREJUDGMENT INTEREST OF $3,716.74, AND A CIVIL MONETARY PENALTY OF $650,000.
Other filed details
Description of allegations — filed text
THE SECURITIES AND EXCHANGE COMMISSION (SEC) DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 (EXCHANGE ACT), AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 (ADVISERS ACT) AGAINST BENJAMIN F. EDWARDS & COMPANY, INC. (BENJAMIN EDWARDS). THE SEC FINDS THAT THIS MATTER CONCERNS BENJAMIN EDWARDS'S FAILURE REASONABLY TO SUPERVISE CERTAIN OF ITS REGISTERED REPRESENTATIVES (BROKERAGE REPRESENTATIVES) AND INVESTMENT ADVISORY REPRESENTATIVES (ADVISORY REPRESENTATIVES) WHO MADE UNSUITABLE RECOMMENDATIONS TO ITS RETAIL BROKERAGE CUSTOMERS AND ADVISORY CLIENTS THAT THEY BUY AND HOLD FOR EXTENDED PERIODS TWO COMPLEX EXCHANGE TRADED PRODUCTS THAT WERE INTENDED FOR SHORT-TERM HOLDING (COMPLEX ETPS). THESE BROKERAGE REPRESENTATIVES MADE THESE RECOMMENDATIONS TO BUY AND HOLD THE COMPLEX ETPS WITHOUT HAVING A REASONABLE BASIS TO DO SO. SIMILARLY, THE BROKERAGE AND ADVISORY REPRESENTATIVES FAILED TO MAKE A REASONABLE DETERMINATION THAT THESE INVESTMENTS WERE SUITABLE FOR CERTAIN OF THE CUSTOMERS AND CLIENTS TO WHOM THEY RECOMMENDED THE COMPLEX ETPS, BASED ON THOSE RETAIL CUSTOMERS' AND CLIENTS' INVESTMENT OBJECTIVES, RISK TOLERANCE, AND FINANCIAL CONDITION. A NUMBER OF THESE BROKERAGE AND ADVISORY REPRESENTATIVES ALSO MISLED THEIR CUSTOMERS AND CLIENTS ABOUT THE COMPLEX ETPS' BENEFITS AND RISKS. BENJAMIN EDWARDS FAILED REASONABLY TO IMPLEMENT ITS SUPERVISORY POLICIES AND PROCEDURES TO PREVENT AND DETECT THESE VIOLATIONS AND FAILED TO IMPLEMENT POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT ITS ADVISORY REPRESENTATIVES FROM MAKING UNSUITABLE RECOMMENDATIONS TO ITS CLIENTS. FROM JANUARY 2016 THROUGH MARCH 2020, CERTAIN BROKERAGE AND ADVISORY REPRESENTATIVES RECOMMENDED THAT MANY OF THEIR RETAIL BROKERAGE CUSTOMERS AND ADVISORY CLIENTS BUY AND HOLD ONE OR MORE OF THE COMPLEX ETPS FOR MANY MONTHS AT A TIME, AS A HEDGE AGAINST THE ANTICIPATED MARKED DECLINE. THE COMPLEX ETPS WERE: (1) THE IPATH S&P 500 VIX SHORT-TERM FUTURES ETN, AND (2) THE PROSHARES VIX SHORT-TERM FUTURES ETF. THE OFFERING DOCUMENTS GENERALLY DISCLOSED THAT THE PRODUCTS CARRIED A HIGHER RISK OF SIGNIFICANT LOSSES IF HELD FOR EXTENDED PERIODS. THE BROKERAGE AND ADVISORY REPRESENTATIVES MISUNDERSTOOD THE COMPLEX ETPS, OR IGNORED THESE DISCLOSURES, AND MADE UNSUITABLE RECOMMENDATIONS TO CUSTOMERS AND CLIENTS THAT THEY BUY AND HOLD THE COMPLEX ETPS. BENJAMIN EDWARDS FAILED REASONABLY TO IMPLEMENT ITS SUPERVISORY POLICIES AND PROCEDURES THAT WERE INTENDED TO PROVIDE ASSURANCE THAT ITS BROKERAGE REPRESENTATIVES HAD A REASONABLE BASIS TO RECOMMEND COMPLEX PRODUCTS SUCH AS THE COMPLEX ETPS TO THEIR CUSTOMERS; FAILED TO IMPLEMENT ITS SUPERVISORY POLICIES AND PROCEDURES THAT WERE INTENDED TO PROVIDE ASSURANCE THAT ITS BROKERAGE REPRESENTATIVES AND ADVISORY REPRESENTATIVES MADE REASONABLE DETERMINATIONS THAT THE INVESTMENTS IN COMPLEX ETPS WERE SUITABLE FOR EACH INDIVIDUAL BROKERAGE CUSTOMER OR ADVISORY CLIENT; IN ADDITION, AND FAILED TO IMPLEMENT ADVISORY POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT UNSUITABLE RECOMMENDATIONS THAT THEIR RETAIL ADVISORY CLIENTS BUY AND HOLD THE COMPLEX ETPS FOR EXTENDED PERIODS. AS A RESULT, BENJAMIN EDWARDS'S RETAIL BROKERAGE CUSTOMERS AND ADVISORY CLIENTS BOUGHT AND HELD THE COMPLEX ETPS FOR EXTENDED PERIODS IN APPROX. 201 ACCOUNTS AND LOST ON AVERAGE MORE THAN 41 PERCENT OF THE AMOUNTS THEY INVESTED. BENJAMIN EDWARDS FAILED REASONABLY TO SUPERVISE ITS BROKERAGE AND ADVISORY REPRESENTATIVES WITH RESPECT TO THEIR UNSUITABLE RECOMMENDATIONS TO CUSTOMERS AND CLIENTS, WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT AND SECTION 203(E)(6) OF THE ADVISERS ACT, AND WITH A VIEW TO PREVENTING AND DETECTING THEIR VIOLATIONS OF SECTIONS 17(A)(2) AND 17(A)(3) OF THE SECURITIES ACT. BENJAMIN EDWARDS VIOLATED SECTION 206(4) AND RULE 206(4)-7 THEREUNDER.
Sanction detail — filed text
IT IS HEREBY ORDERED THAT BENJAMIN EDWARDS CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; IS CENSURED FOR FAILING REASONABLY TO SUPERVISE WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT AND SECTION 203(E) OF THE ADVISERS ACT AND FOR ITS WILLFUL VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; AND SHALL PAY DISGORGEMENT OF $31,417.62, PREJUDGMENT INTEREST OF $3,716.74, AND A CIVIL MONETARY PENALTY OF $650,000.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an
INITIAL OR
AMENDED response used to report details for affirmative responses to Items 11.C., 11.D.,
11.E., 11.F. or 11.G. of Form ADV.
Regulatory Action
Check item(s) being responded to:
11.C(1)
11.C(2)
11.C(3)
11.C(4)
11.C(5)
11.D(1)
11.D(2)
11.D(3)
11.D(4)
11.D(5)
11.E(1)
11.E(2)
11.E(3)
11.E(4)
11.F.
11.G.
Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File
with a completed Execution Page.
One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the
same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP.
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
You (the advisory firm)
You and one or more of your advisory affiliates
One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name).
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box.
ADV DRP - ADVISORY AFFILIATE
No Information Filed
This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser.
This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is
registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the
adviser's or advisory affiliate's favor.
If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item
11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any
event listed in Item 11 that occurred more than ten years ago.
This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the
circumstances:
B.
If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to
the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided.
Yes
No
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records.
PART II
1. Regulatory Action initiated by:
SEC
Other Federal
State
SRO
Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
2.
Principal Sanction:
Cease and Desist
Other Sanctions:
3.
Date Initiated (MM/DD/YYYY):
11/13/2020
Exact
Explanation
If not exact, provide explanation:
4.
Docket/Case Number:
3-20153
5.
Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable):
N/A
6.
Principal Product Type:
Other
Other Product Types:
EXCHANGE TRADED PRODUCTS ("COMPLEX ETPS").
7.
Describe the allegations related to this regulatory action (your response must fit within the space provided):
THE SECURITIES AND EXCHANGE COMMISSION (SEC) DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND
CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934
(EXCHANGE ACT), AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 (ADVISERS ACT) AGAINST BENJAMIN F. EDWARDS &
COMPANY, INC. (BENJAMIN EDWARDS). THE SEC FINDS THAT THIS MATTER CONCERNS BENJAMIN EDWARDS'S FAILURE REASONABLY TO SUPERVISE
CERTAIN OF ITS REGISTERED REPRESENTATIVES (BROKERAGE REPRESENTATIVES) AND INVESTMENT ADVISORY REPRESENTATIVES (ADVISORY
REPRESENTATIVES) WHO MADE UNSUITABLE RECOMMENDATIONS TO ITS RETAIL BROKERAGE CUSTOMERS AND ADVISORY CLIENTS THAT THEY BUY AND
HOLD FOR EXTENDED PERIODS TWO COMPLEX EXCHANGE TRADED PRODUCTS THAT WERE INTENDED FOR SHORT-TERM HOLDING (COMPLEX ETPS).
THESE BROKERAGE REPRESENTATIVES MADE THESE RECOMMENDATIONS TO BUY AND HOLD THE COMPLEX ETPS WITHOUT HAVING A REASONABLE
BASIS TO DO SO. SIMILARLY, THE BROKERAGE AND ADVISORY REPRESENTATIVES FAILED TO MAKE A REASONABLE DETERMINATION THAT THESE
INVESTMENTS WERE SUITABLE FOR CERTAIN OF THE CUSTOMERS AND CLIENTS TO WHOM THEY RECOMMENDED THE COMPLEX ETPS, BASED ON THOSE
RETAIL CUSTOMERS' AND CLIENTS' INVESTMENT OBJECTIVES, RISK TOLERANCE, AND FINANCIAL CONDITION. A NUMBER OF THESE BROKERAGE AND
ADVISORY REPRESENTATIVES ALSO MISLED THEIR CUSTOMERS AND CLIENTS ABOUT THE COMPLEX ETPS' BENEFITS AND RISKS. BENJAMIN EDWARDS
FAILED REASONABLY TO IMPLEMENT ITS SUPERVISORY POLICIES AND PROCEDURES TO PREVENT AND DETECT THESE VIOLATIONS AND FAILED TO
IMPLEMENT POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT ITS ADVISORY REPRESENTATIVES FROM MAKING UNSUITABLE
RECOMMENDATIONS TO ITS CLIENTS. FROM JANUARY 2016 THROUGH MARCH 2020, CERTAIN BROKERAGE AND ADVISORY REPRESENTATIVES
RECOMMENDED THAT MANY OF THEIR RETAIL BROKERAGE CUSTOMERS AND ADVISORY CLIENTS BUY AND HOLD ONE OR MORE OF THE COMPLEX ETPS
FOR MANY MONTHS AT A TIME, AS A HEDGE AGAINST THE ANTICIPATED MARKED DECLINE. THE COMPLEX ETPS WERE: (1) THE IPATH S&P 500 VIX
SHORT-TERM FUTURES ETN, AND (2) THE PROSHARES VIX SHORT-TERM FUTURES ETF. THE OFFERING DOCUMENTS GENERALLY DISCLOSED THAT THE
PRODUCTS CARRIED A HIGHER RISK OF SIGNIFICANT LOSSES IF HELD FOR EXTENDED PERIODS. THE BROKERAGE AND ADVISORY REPRESENTATIVES
MISUNDERSTOOD THE COMPLEX ETPS, OR IGNORED THESE DISCLOSURES, AND MADE UNSUITABLE RECOMMENDATIONS TO CUSTOMERS AND CLIENTS
THAT THEY BUY AND HOLD THE COMPLEX ETPS. BENJAMIN EDWARDS FAILED REASONABLY TO IMPLEMENT ITS SUPERVISORY POLICIES AND
PROCEDURES THAT WERE INTENDED TO PROVIDE ASSURANCE THAT ITS BROKERAGE REPRESENTATIVES HAD A REASONABLE BASIS TO RECOMMEND
COMPLEX PRODUCTS SUCH AS THE COMPLEX ETPS TO THEIR CUSTOMERS; FAILED TO IMPLEMENT ITS SUPERVISORY POLICIES AND PROCEDURES THAT
WERE INTENDED TO PROVIDE ASSURANCE THAT ITS BROKERAGE REPRESENTATIVES AND ADVISORY REPRESENTATIVES MADE REASONABLE
DETERMINATIONS THAT THE INVESTMENTS IN COMPLEX ETPS WERE SUITABLE FOR EACH INDIVIDUAL BROKERAGE CUSTOMER OR ADVISORY CLIENT; IN
ADDITION, AND FAILED TO IMPLEMENT ADVISORY POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT UNSUITABLE RECOMMENDATIONS
THAT THEIR RETAIL ADVISORY CLIENTS BUY AND HOLD THE COMPLEX ETPS FOR EXTENDED PERIODS. AS A RESULT, BENJAMIN EDWARDS'S RETAIL
BROKERAGE CUSTOMERS AND ADVISORY CLIENTS BOUGHT AND HELD THE COMPLEX ETPS FOR EXTENDED PERIODS IN APPROX. 201 ACCOUNTS AND
LOST ON AVERAGE MORE THAN 41 PERCENT OF THE AMOUNTS THEY INVESTED. BENJAMIN EDWARDS FAILED REASONABLY TO SUPERVISE ITS
BROKERAGE AND ADVISORY REPRESENTATIVES WITH RESPECT TO THEIR UNSUITABLE RECOMMENDATIONS TO CUSTOMERS AND CLIENTS, WITHIN THE
MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT AND SECTION 203(E)(6) OF THE ADVISERS ACT, AND WITH A VIEW TO PREVENTING AND
DETECTING THEIR VIOLATIONS OF SECTIONS 17(A)(2) AND 17(A)(3) OF THE SECURITIES ACT. BENJAMIN EDWARDS VIOLATED SECTION 206(4) AND
RULE 206(4)-7 THEREUNDER.
8.
Current Status?
Pending
On Appeal
Final
9.
If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved:
Order
11. Resolution Date (MM/DD/YYYY):
11/13/2020
Exact
Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
Monetary/Fine Amount: $ 650,000.00
Revocation/Expulsion/Denial
Disgorgement/Restitution
Censure
Cease and Desist/Injunction
Bar
Suspension
B.
Other Sanctions Ordered:
PREJUDGMENT INTEREST ON DISGORGEMENT
Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal,
Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to
requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion
of penalty was waived:
IT IS HEREBY ORDERED THAT BENJAMIN EDWARDS CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE
VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; IS CENSURED FOR FAILING REASONABLY TO
SUPERVISE WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT AND SECTION 203(E) OF THE ADVISERS ACT AND FOR ITS
WILLFUL VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; AND SHALL PAY DISGORGEMENT OF
$31,417.62, PREJUDGMENT INTEREST OF $3,716.74, AND A CIVIL MONETARY PENALTY OF $650,000.
13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response
must fit within the space provided).
BENJAMIN EDWARDS HAS SUBMITTED AN OFFER OF SETTLEMENT, WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. BENJAMIN EDWARDS
WILLFULLY VIOLATED SECTION 206(4) AND RULE 206(4)-7 THEREUNDER. ACCORDINGLY, IT IS HEREBY ORDERED THAT BENJAMIN EDWARDS CEASE
AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE
206(4)-7 THEREUNDER; IS CENSURED FOR FAILING REASONABLY TO SUPERVISE WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT
AND SECTION 203(E) OF THE ADVISERS ACT AND FOR ITS WILLFUL VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7
THEREUNDER; AND SHALL PAY DISGORGEMENT OF $31,417.62, PREJUDGMENT INTEREST OF $3,716.74, AND A CIVIL MONETARY PENALTY OF $650,000.regulatory · block 6PDF pages 87–89
- Regulator name — filed text
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION
- How was matter resolved — filed text
- Order
Action status / disposition — filed text
RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THE FOREGOING, THE COMMISSION DEEMS IT APPROPRIATE IN THE PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO IN THE RESPONDENT'S OFFER. ACCORDINGLY, IT IS ORDERED THAT RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $3,151,205.81 AND PREJUDGMENT INTEREST OF $294,058.93, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. RESPONDENT SELF-REPORTED TO THE COMMISSION THE VIOLATIONS DISCUSSED IN THIS ORDER PURSUANT TO THE DIVISION OF ENFORCEMENT'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE ("SCSD INITIATIVE"). ACCORDINGLY, THIS ORDER AND RESPONDENT'S OFFER ARE BASED ON THE INFORMATION SELF- REPORTED BY RESPONDENT.
Other filed details
Description of allegations — filed text
IA RELEASE 40-5151 / MARCH 11, 2019: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED AGAINST BENJAMIN F. EDWARDS & CO., INC. ("RESPONDENT"). ON THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF BREACHES OF FIDUCIARY DUTY AND INADEQUATE DISCLOSURES BY THE RESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARE CLASS SELECTION PRACTICES AND THE FEES IT RECEIVED. AT TIMES DURING THE RELEVANT PERIOD, RESPONDENT PURCHASED, RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE. RESPONDENT RECEIVED 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS. RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OR OTHERWISE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES THAT PAY SUCH FEES. DURING THE RELEVANT PERIOD, RESPONDENT RECEIVED 12B-1 FEES FOR ADVISING CLIENTS TO INVEST IN OR HOLD SUCH MUTUAL FUND SHARE CLASSES. AS A RESULT OF THE CONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS 206(2) AND 207 OF THE ADVISERS ACT.
Sanction detail — filed text
THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $3,151,205.81 AND PREJUDGMENT INTEREST OF $294,058.93, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an
INITIAL OR
AMENDED response used to report details for affirmative responses to Items 11.C., 11.D.,
11.E., 11.F. or 11.G. of Form ADV.
Regulatory Action
Check item(s) being responded to:
11.C(1)
11.C(2)
11.C(3)
11.C(4)
11.C(5)
11.D(1)
11.D(2)
11.D(3)
11.D(4)
11.D(5)
11.E(1)
11.E(2)
11.E(3)
11.E(4)
11.F.
11.G.
Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File
with a completed Execution Page.
One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the
same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP.
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
You (the advisory firm)
You and one or more of your advisory affiliates
One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name).
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box.
ADV DRP - ADVISORY AFFILIATE
No Information Filed
This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser.
This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is
registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the
adviser's or advisory affiliate's favor.
If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item
11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any
event listed in Item 11 that occurred more than ten years ago.
This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the
circumstances:
B.
If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to
the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided.
Yes
No
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records.
PART II
1. Regulatory Action initiated by:
SEC
Other Federal
State
SRO
Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
2.
Principal Sanction:
Other Sanctions:
3.
Date Initiated (MM/DD/YYYY):
03/11/2019
Exact
Explanation
If not exact, provide explanation:
4.
Docket/Case Number:
3-19054
5.
Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable):
6.
Principal Product Type:
Money Market Fund(s)
Other Product Types:
7.
Describe the allegations related to this regulatory action (your response must fit within the space provided):
IA RELEASE 40-5151 / MARCH 11, 2019: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT
PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED AGAINST BENJAMIN F. EDWARDS & CO., INC. ("RESPONDENT"). ON
THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF BREACHES OF FIDUCIARY
DUTY AND INADEQUATE DISCLOSURES BY THE RESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARE CLASS SELECTION PRACTICES AND THE
FEES IT RECEIVED. AT TIMES DURING THE RELEVANT PERIOD, RESPONDENT PURCHASED, RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL
FUND SHARE CLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE
ELIGIBLE. RESPONDENT RECEIVED 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS. RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OR
OTHERWISE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES
THAT PAY SUCH FEES. DURING THE RELEVANT PERIOD, RESPONDENT RECEIVED 12B-1 FEES FOR ADVISING CLIENTS TO INVEST IN OR HOLD SUCH
MUTUAL FUND SHARE CLASSES. AS A RESULT OF THE CONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS 206(2) AND 207 OF THE ADVISERS ACT.
8.
Current Status?
Pending
On Appeal
Final
9.
If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved:
Order
11. Resolution Date (MM/DD/YYYY):
03/11/2019
Exact
Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
Monetary/Fine Amount: $
Revocation/Expulsion/Denial
Disgorgement/Restitution
Censure
Cease and Desist/Injunction
Bar
Suspension
B.
Other Sanctions Ordered:
UNDERTAKINGS AND PREJUDGMENT INTEREST
Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal,
Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to
requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion
of penalty was waived:
THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS
206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $3,151,205.81 AND PREJUDGMENT INTEREST
OF $294,058.93, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT.
13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response
must fit within the space provided).
RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THE FOREGOING, THE
COMMISSION DEEMS IT APPROPRIATE IN THE PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO IN THE RESPONDENT'S OFFER. ACCORDINGLY,
IT IS ORDERED THAT RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF
SECTIONS 206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $3,151,205.81 AND PREJUDGMENT
INTEREST OF $294,058.93, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. RESPONDENT SELF-REPORTED
TO THE COMMISSION THE VIOLATIONS DISCUSSED IN THIS ORDER PURSUANT TO THE DIVISION OF ENFORCEMENT'S SHARE CLASS SELECTION
DISCLOSURE INITIATIVE ("SCSD INITIATIVE"). ACCORDINGLY, THIS ORDER AND RESPONDENT'S OFFER ARE BASED ON THE INFORMATION SELF-
REPORTED BY RESPONDENT.Show 1 more source blocks
regulatory · block 7PDF pages 89–91
- Regulator name — filed text
- FINRA
- Monetary/Fine Amount — filed text
- $ 750,000.00
- How was matter resolved — filed text
- Acceptance, Waiver & Consent(AWC)
Other filed details
Description of allegations — filed text
WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REASONABLY SUPERVISE ITS EMPLOYEES' BUSINESS-RELATED TEXT MESSAGES. THE FINDINGS STATED THAT THE FIRM'S SUPERVISORY SYSTEM, INCLUDING ITS WRITTEN PROCEDURES, WAS NOT REASONABLY DESIGNED BECAUSE THE FIRM HAD NO PROCESS OR PROCEDURES, WRITTEN OR OTHERWISE, FOR MONITORING FOR COMPLIANCE WITH ITS TEXT MESSAGING POLICIES. THE POLICIES GENERALLY PROHIBITED THE BUSINESS USE OF TEXT MESSAGING EXCEPT THOSE SENT OR RECEIVED THROUGH A FIRM-APPROVED SOFTWARE THAT WOULD CAPTURE AND PRESERVE THE TEXT MESSAGES. NOTWITHSTANDING THIS PROHIBITION, REGISTERED REPRESENTATIVES OF THE FIRM, INCLUDING AT LEAST ONE SENIOR EXECUTIVE, USED TEXT MESSAGING FOR BUSINESS-RELATED COMMUNICATIONS THROUGH UNAPPROVED MEANS. IN ADDITION, DISCOVERY SANCTIONS WERE IMPOSED AGAINST THE FIRM IN OCTOBER 2019, BUT THE FIRM FAILED TO TAKE REASONABLE STEPS TO COMPLY WITH ITS OBLIGATIONS TO REASONABLY SUPERVISE, PRESERVE, AND REVIEW BUSINESS-RELATED COMMUNICATIONS DESPITE THIS RED FLAG. SUBSEQUENTLY, THE FIRM RETAINED A CONSULTANT TO REVIEW THE FIRM'S SUPERVISION OF TEXT MESSAGING. BASED ON RECOMMENDATIONS FROM THE CONSULTANT, THE FIRM ULTIMATELY HAD, AMONG OTHER THINGS, STRENGTHENED ITS WSPS CONCERNING TEXT MESSAGING, REQUIRED REGULAR CERTIFICATIONS CONCERNING ITS TEXT MESSAGING POLICIES, INCREASED COMMUNICATIONS AND TRAINING CONCERNING ITS TEXT MESSAGING POLICIES, AND STRENGTHENED ITS ELECTRONIC COMMUNICATION MONITORING SYSTEMS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO OBTAIN OR PRESERVE ALL BUSINESS-RELATED TEXT MESSAGES AT THE TIME THEY WERE EXCHANGED. AT LEAST FIVE REGISTERED REPRESENTATIVES, INCLUDING ONE SENIOR EXECUTIVE, SENT AND RECEIVED AT LEAST 3,560 TEXT MESSAGES TO COMMUNICATE ABOUT FIRM BUSINESS THROUGH UNAPPROVED TEXT MESSAGING APPLICATIONS ON THEIR PERSONAL DEVICES. THESE TEXT MESSAGES INVOLVED, AMONG OTHER THINGS, RECEIVING INVESTMENT DIRECTIVES AND SENSITIVE PERSONAL INFORMATION FROM CUSTOMERS AND GIVING INVESTMENT ADVICE TO CUSTOMERS. THE FIRM WAS ABLE TO RECOVER CERTAIN OF THESE TEXT MESSAGES DURING FINRA'S INVESTIGATION. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO COMPLY WITH ITS DISCOVERY OBLIGATIONS IN A FINRA ARBITRATION. IN SEPTEMBER 2017, ANOTHER FINRA MEMBER FIRM FILED AN ARBITRATION AGAINST THE FIRM AND CERTAIN OF ITS REGISTERED REPRESENTATIVES RELATED TO ITS RECRUITING OF FOUR OF ITS REGISTERED REPRESENTATIVES. THE FIRM RECEIVED DISCOVERY REQUESTS IN DECEMBER 2017 FOR ELECTRONIC COMMUNICATIONS RELEVANT TO THE DISPUTE DATING BACK TO BEFORE SEPTEMBER 2016. THE ARBITRATION PANEL ISSUED ORDERS IN OCTOBER 2018 COMPELLING THE FIRM TO PRODUCE THE REQUESTED COMMUNICATIONS BY NOVEMBER 2018, WHICH INCLUDED BUSINESS-RELATED TEXT MESSAGES. THE FIRM FAILED TO TIMELY AND FULLY COMPLY WITH THE ARBITRATION PANEL'S ORDERS, AND THE ARBITRATION PANEL ISSUED AN ORDER IN MAY 2019 IMPOSING SANCTIONS. IN JULY 2019, THE ARBITRATION PANEL PAUSED THE PROCEEDING AND ORDERED DEPOSITIONS OF REGISTERED REPRESENTATIVES OF THE FIRM RELATED TO, AMONG OTHER THINGS, POTENTIALLY DISCOVERABLE TEXT MESSAGES. THE DEPOSITIONS REVEALED THE EXISTENCE OF RESPONSIVE TEXT MESSAGES THAT HAD NOT BEEN PRODUCED IN DISCOVERY. SUBSEQUENTLY, THE FIRM WAS BELATEDLY ABLE TO OBTAIN AND PRODUCE SOME, BUT NOT ALL, OF THE RESPONSIVE TEXT MESSAGES. IN OCTOBER 2019, THE ARBITRATION PANEL ISSUED A SECOND ORDER IMPOSING ADDITIONAL SANCTIONS BECAUSE THE FIRM DID NOT CURE THE DISCOVERY DEFICIENCY.
Sanction detail — filed text
THE FIRM WAS CENSURED AND FINED $750,000. FINE PAID IN FULL ON FEBRUARY 10, 2026.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE No Information Filed This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) FINRA 2. Principal Sanction: Other Other Sanctions: N/A 3. Date Initiated (MM/DD/YYYY): 01/30/2026 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: 2022073836301 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): 6. Principal Product Type: No Product Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REASONABLY SUPERVISE ITS EMPLOYEES' BUSINESS-RELATED TEXT MESSAGES. THE FINDINGS STATED THAT THE FIRM'S SUPERVISORY SYSTEM, INCLUDING ITS WRITTEN PROCEDURES, WAS NOT REASONABLY DESIGNED BECAUSE THE FIRM HAD NO PROCESS OR PROCEDURES, WRITTEN OR OTHERWISE, FOR MONITORING FOR COMPLIANCE WITH ITS TEXT MESSAGING POLICIES. THE POLICIES GENERALLY PROHIBITED THE BUSINESS USE OF TEXT MESSAGING EXCEPT THOSE SENT OR RECEIVED THROUGH A FIRM-APPROVED SOFTWARE THAT WOULD CAPTURE AND PRESERVE THE TEXT MESSAGES. NOTWITHSTANDING THIS PROHIBITION, REGISTERED REPRESENTATIVES OF THE FIRM, INCLUDING AT LEAST ONE SENIOR EXECUTIVE, USED TEXT MESSAGING FOR BUSINESS-RELATED COMMUNICATIONS THROUGH UNAPPROVED MEANS. IN ADDITION, DISCOVERY SANCTIONS WERE IMPOSED AGAINST THE FIRM IN OCTOBER 2019, BUT THE FIRM FAILED TO TAKE REASONABLE STEPS TO COMPLY WITH ITS OBLIGATIONS TO REASONABLY SUPERVISE, PRESERVE, AND REVIEW BUSINESS-RELATED COMMUNICATIONS DESPITE THIS RED FLAG. SUBSEQUENTLY, THE FIRM RETAINED A CONSULTANT TO REVIEW THE FIRM'S SUPERVISION OF TEXT MESSAGING. BASED ON RECOMMENDATIONS FROM THE CONSULTANT, THE FIRM ULTIMATELY HAD, AMONG OTHER THINGS, STRENGTHENED ITS WSPS CONCERNING TEXT MESSAGING, REQUIRED REGULAR CERTIFICATIONS CONCERNING ITS TEXT MESSAGING POLICIES, INCREASED COMMUNICATIONS AND TRAINING CONCERNING ITS TEXT MESSAGING POLICIES, AND STRENGTHENED ITS ELECTRONIC COMMUNICATION MONITORING SYSTEMS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO OBTAIN OR PRESERVE ALL BUSINESS-RELATED TEXT MESSAGES AT THE TIME THEY WERE EXCHANGED. AT LEAST FIVE REGISTERED REPRESENTATIVES, INCLUDING ONE SENIOR EXECUTIVE, SENT AND RECEIVED AT LEAST 3,560 TEXT MESSAGES TO COMMUNICATE ABOUT FIRM BUSINESS THROUGH UNAPPROVED TEXT MESSAGING APPLICATIONS ON THEIR PERSONAL DEVICES. THESE TEXT MESSAGES INVOLVED, AMONG OTHER THINGS, RECEIVING INVESTMENT DIRECTIVES AND SENSITIVE PERSONAL INFORMATION FROM CUSTOMERS AND GIVING INVESTMENT ADVICE TO CUSTOMERS. THE FIRM WAS ABLE TO RECOVER CERTAIN OF THESE TEXT MESSAGES DURING FINRA'S INVESTIGATION. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO COMPLY WITH ITS DISCOVERY OBLIGATIONS IN A FINRA ARBITRATION. IN SEPTEMBER 2017, ANOTHER FINRA MEMBER FIRM FILED AN ARBITRATION AGAINST THE FIRM AND CERTAIN OF ITS REGISTERED REPRESENTATIVES RELATED TO ITS RECRUITING OF FOUR OF ITS REGISTERED REPRESENTATIVES. THE FIRM RECEIVED DISCOVERY REQUESTS IN DECEMBER 2017 FOR ELECTRONIC COMMUNICATIONS RELEVANT TO THE DISPUTE DATING BACK TO BEFORE SEPTEMBER 2016. THE ARBITRATION PANEL ISSUED ORDERS IN OCTOBER 2018 COMPELLING THE FIRM TO PRODUCE THE REQUESTED COMMUNICATIONS BY NOVEMBER 2018, WHICH INCLUDED BUSINESS-RELATED TEXT MESSAGES. THE FIRM FAILED TO TIMELY AND FULLY COMPLY WITH THE ARBITRATION PANEL'S ORDERS, AND THE ARBITRATION PANEL ISSUED AN ORDER IN MAY 2019 IMPOSING SANCTIONS. IN JULY 2019, THE ARBITRATION PANEL PAUSED THE PROCEEDING AND ORDERED DEPOSITIONS OF REGISTERED REPRESENTATIVES OF THE FIRM RELATED TO, AMONG OTHER THINGS, POTENTIALLY DISCOVERABLE TEXT MESSAGES. THE DEPOSITIONS REVEALED THE EXISTENCE OF RESPONSIVE TEXT MESSAGES THAT HAD NOT BEEN PRODUCED IN DISCOVERY. SUBSEQUENTLY, THE FIRM WAS BELATEDLY ABLE TO OBTAIN AND PRODUCE SOME, BUT NOT ALL, OF THE RESPONSIVE TEXT MESSAGES. IN OCTOBER 2019, THE ARBITRATION PANEL ISSUED A SECOND ORDER IMPOSING ADDITIONAL SANCTIONS BECAUSE THE FIRM DID NOT CURE THE DISCOVERY DEFICIENCY. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Acceptance, Waiver & Consent(AWC) 11. Resolution Date (MM/DD/YYYY): 01/30/2026 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ 750,000.00 Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: THE FIRM WAS CENSURED AND FINED $750,000. FINE PAID IN FULL ON FEBRUARY 10, 2026. 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided).
* Metrics are based on the latest available data, including Form ADV filings, brochures, and relationship summaries pulled from the SEC IAPD, and may be subject to change. Learn what is included in the Rialytix data. Please refer to the firm's official disclosures for the most accurate information using their CRD number. This is not investment advice.