Cetera Advisors Roger Owens

National Securities Corp FINRA Lawsuit

Haselkorn & Thibaut (InvestmentFraudLawyers.com) is currently investigating National Securities Corporation for allegations of financial advisor malpractice. This is a national investigation involving the sales practices and product sales of investment products to clients. Anyone who invested with National Securities

Investors should be aware that the current (February 2020) FINRA Brokercheck report reflects 79 total disclosures. This includes:

  • 62 disclosures include regulatory events.
  • 2 disclosures reference civil events.
  • 15 disclosures reference arbitration matters.

National Securities Corporation is headquartered in Seattle, Washington, and the firm is licensed to operate in 53 U.S. states and American territories. The FINRA Brokercheck report also reflects the main address in Boca Raton, Florida.

Reuters reported the results of a comprehensive investigative report in 2017 that focused on broker-dealers and investment firms that currently employ a high concentration of financial advisors and brokers who had red flags on their record with FINRA.

National Securities Corporation was predominately displayed on this list of broker-dears, with Reuters showing that 34.6 percent of the NSC’s 714 brokers had at least one piece of negative information on their official record.

In October 2017, Financial Advisor Magazine published “Firm Does What FINRA Won’t: Rates 30 Worst Brokerage Firms” (10/24/17). See Table 1, Worst Firms by Firms’ Current Brokers’ Histories of Resolved Customer Complaints. Also, see Table 2, Worst Firms Ranked by Pending Customer Complaints.

Breach of Fiduciary Duty and Broker Negligence

In December 2016, a FINRA arbitration panel found against the is the brokerage and one of its representatives in a case involving allegations including a breach of fiduciary duty. This case was associated with a National Securities Corporation customer’s purchase of a large number of stock in a company called Islet Sciences. Notably, this was a penny stock. The investor alleged that a National Securities Corporation’s financial advisor negligently misrepresented a penny stock investment. The arbitration panel agreed with this investor, awarding $155,000.

Churning and Unauthorized Trading

In February of 2015, National Securities Corporation’s financial advisor John Joseph Labarca (CRD#: 2030473) was permanently barred from the securities and investment industry for allegedly committing serious misconduct, including not producing requested information and failing to cooperate with FINRA investigators. While employed as a financial advisor at NSC, Mr. Labarca was based in Houston, Texas. An investor accused Mr. Labarca of making unauthorized trades and churning his investment brokerage account. The FINRA dispute went before a FINRA arbitration panel, which found in favor of the investor, awarding him $504,443.04.

Unsuitable Investments

National Securities Corporation’s financial advisors allegedly made unsuitable recommendations. In December 2013, a FINRA arbitration panel awarded a Colorado investor more than $219,000 in damages for investment losses related to a National Securities Corporation’s financial advisor’s recommendations that she put her money into unsuitable mutual funds.

A Failed High-Risk Private Placement

A private placement investment is notoriously risky for most main street type investors. As such, financial advisors and their firms must conduct proper due diligence before making any such recommendations. In 2011, National Securities Corporation was ordered to pay $175,000 in restitution to affected investors for its misconduct relating to a failed private placement.

Even with private placements, brokerage firms like National Securities Corporation still have a legal duty to ensure that the specific investment security in question is suitable for any of their clients that they are pushing it on. FINRA investigators discovered that the NSC failed to properly protect the best interests of their clients because its financial advisors recommended a very high-risk private placement to investors who had no business being in such an investment.

Read About Another Private Placement Lawsuit –  GPB Capital Lawsuit – GPB Ponzi Scheme

Failed to Comply

In December 2019, a former National Securities Corporation financial advisor (Todd Joseph Heinrich) was suspended by FINRA for allegedly failing to comply with a FINRA arbitration award or settlement agreement.

Failure to Supervise

The State of Indiana Securities Division and National Securities Corporation entered into an Order of Consent and agreed in December 2013 to a fine for failure to properly supervise a financial advisor doing business in Indiana. The Indiana Securities Division alleged the financial advisor was not yet properly registered in Indiana when he was opening accounts with clients residing in Indiana. As alleged, a National Securities Corporation supervisor approved the new accounts at the time as well.

Private Placements

National Securities Corporation entered into a Letter of Acceptance, Waiver and Consent (AWC) with FINRA in which the NSC was ordered to pay $175,000 for failing to have reasonable grounds to believe that private placements offered by Provident Royalties, LLC and Medical Capital Holdings, Inc. were suitable for any customer.

National Securities Corporation alledgely failed to conduct adequate due diligence of private placements investment it offered. NSC also failed to enforce, establish, and maintain a sufficient supervisory process /system designed to comply with rules in connection with the sale of private placements for investors.

Even when the investment companies failed to make timely interest payments and defaulted on principal payments, National Securities Corporation continued to allow its representatives to sell additional offerings. The missed interest payments and defaults, according to FINRA, should have been a red flag to National Securities Corporation of possible problems with the private placement offerings. (See: FINRA Case #2009019068201).

You cannot copy content of this page.  We running copyright protection software.  Please contact us for use.
Scroll to Top