Securities America Ordered to Pay Investors $6.7 Million
An NASD arbitration Panel ordered Securities America to pay two investors a total of $6.7 million plus attorneys’ fees. NASD Panel found that Securities America was negligent in hiring the broker in the first place and then it permitted the unregistered broker, who fraudulently worked under an assumed name, to engage in abusive and unsuitable trading in the customers’ accounts. Moreover, after Securities America learned of the broker’s misdeeds, it intentionally withheld crucial information that might have not only assisted Securities America’s customers, but also mitigated the damages that the customers had incurred.
Securities America fined for Supervision Failures
The NASD fined Securities America $2.5 million for failing to supervise a broker who allegedly lured clients into early retirement with exaggerated promises of high returns. The firm was also ordered to pay $13.8 million in restitution to victims and to hire a consultant to review its supervisory procedures. According to the NASD, a Securities America broker offered a group of Exxon Corp. retirees exaggerated promises of high returns. Seminars were held in which Exxon employees between the ages of 50 and 60 were advised to liquidate of their company 401(k) and pension plan assets and deposit the funds into Securities America accounts. The NASD added that “in this case, Securities America’s lack of supervision resulted in Exxon employees being fraudulently induced into retiring early based upon false and misleading projections of future investment returns on their nest eggs.”
Securities America Ordered to Pay $9 Million to Retired Pilots
An NASD arbitration panel ordered Securities America to pay up to $9.3 million to three retired American Airlines pilots who claimed that their Securities America broker improperly invested their retirement savings into risky mutual funds with high fees and trading costs.