IFP Securities, LLC, a Tampa-based brokerage firm with CRD number 297287, recently settled a FINRA enforcement action over the failure of its automated surveillance system. The settlement resulted in a $100,000 fine and a firm censure.
The case, issued on May 7, 2026, shows what can happen when a firm changes vendors and the new system does not work as intended. For more than two years, IFP Securities failed to receive alerts on potentially problematic mutual fund and UIT transactions.
The FINRA settlement
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FINRA case number 2023077036901 was resolved through an AWC, which is a settlement in which the firm accepts sanctions without admitting or denying the findings. IFP Securities agreed to the fine and censure.
The case centered on the firm’s automated surveillance system. In November 2022, IFP Securities changed surveillance vendors. As an unintended consequence, the new system did not generate alerts for certain mutual fund and unit investment trust, or UIT, transactions.
Specifically, the system failed to flag when mutual funds were sold close in time to a purchase, or when UITs were sold before maturity or purchased close in time to a sale. These patterns can indicate switching or short-term trading that may not be in a customer’s best interest.
How long the surveillance gap lasted
The firm discovered the issue and worked with the vendor to fix it. However, the system did not function correctly until 2025. During the intervening period, IFP Securities had no alternative supervisory system in place to review these transactions.
FINRA found that the firm failed to review thousands of mutual fund and UIT transactions. Without working alerts or a manual review process, the firm could not evaluate whether the recommendations were in customers’ best interests.
Regulation Best Interest violations
FINRA found that IFP Securities violated the Care Obligation of Regulation Best Interest, also known as Reg BI. The Care Obligation requires broker-dealers to exercise reasonable diligence, care, and skill when making recommendations to retail customers.
The AWC also stated that the firm failed to maintain and enforce written policies and procedures reasonably designed to achieve compliance with Reg BI. A supervisory system that depends on a single automated tool without a backup process can leave customers exposed when that tool fails.
The Care Obligation applies to recommendations of securities, including mutual funds and UITs. It requires firms to understand the potential risks, rewards, and costs of a recommendation and to have a reasonable basis to believe the recommendation is in the customer’s best interest. Surveillance is one of the tools firms use to satisfy that obligation across a large number of transactions.
What is mutual fund and UIT switching?
Mutual fund switching occurs when a customer sells one mutual fund and quickly purchases another. Frequent switching can generate commissions and fees for the broker while exposing the customer to unnecessary costs and market risk. UIT switching is similar. A UIT has a fixed portfolio and a stated maturity date, so selling before maturity or rolling into another UIT close in time can also generate costs without a clear customer benefit.
Surveillance systems are designed to flag these patterns so that supervisors can review whether the recommendation was justified. When those systems do not work, switching activity can go unnoticed for long periods.
What this means for IFP Securities customers
Customers of IFP Securities who traded mutual funds or UITs between late 2022 and 2025 may want to review their account activity. Look for transactions where a mutual fund was sold and the proceeds were quickly reinvested in another mutual fund, or where a UIT was sold before maturity or shortly after purchase.
These patterns do not automatically mean a claim exists, but they are the exact transactions that the firm’s surveillance system failed to flag. A review of the surrounding facts, including fees, investment objectives, and timing, is necessary to determine whether the recommendation was suitable.
Customers should also look at whether the same fund or UIT was sold and repurchased repeatedly, whether the transactions were concentrated in a short period, and whether the broker received commissions from each transaction. These details can help an attorney evaluate whether the switching was excessive.
How Investment Fraud Lawyers can help
Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, represents investors who have suffered losses due to unsupervised recommendations and failures in firm surveillance. Our attorneys review account records, identify switching activity and short-term trading patterns, and pursue claims through FINRA arbitration when appropriate.
If you held an account at IFP Securities, LLC and believe your mutual fund or UIT transactions were not properly supervised, contact us for a free case review. There are time limits for securities claims.
Call 1-888-885-7162 or reach out online. We work on a contingency basis, and past results do not guarantee future outcomes.
Frequently asked questions
What is FINRA case 2023077036901?
It is the enforcement action against IFP Securities, LLC for failures in its automated surveillance system for mutual fund and UIT transactions. The firm was fined $100,000 and censured.
What transactions were not being surveilled?
The system failed to generate alerts for mutual fund switching and for UITs sold before maturity or purchased close in time to a sale.
How long was the surveillance gap?
The system did not work properly from November 2022 until 2025, a period of roughly two years.
Did the firm have a backup review process?
No. FINRA found that IFP Securities had no alternative supervisory system in place during the period when the alerts were not working.
What is Regulation Best Interest?
Regulation Best Interest requires broker-dealers to act in the best interest of retail customers when making recommendations. It includes a Care Obligation related to diligence, care, and skill.
What is switching?
Switching occurs when a customer sells one security and quickly buys a similar one, often generating commissions and fees without a clear benefit to the customer.
How do I start a claim review?
Call 1-888-885-7162 or contact Investment Fraud Lawyers online. We will review your statements and explain your options at no upfront cost.
Disclaimer: Past results do not guarantee future outcomes. This page provides general information and is not legal advice. No attorney-client relationship is formed by reading this content.
There is no guaranteed recovery in any securities matter. Consult a qualified attorney regarding your specific situation.
