O.N. Equity Sales Company (ONES) is the latest broker-dealer to be found guilty of lack of supervision of its brokers by the Financial Industry Regulatory Authority (FINRA). The result is a fine of $275,000 and an order to pay restitution to impacted customers, amounting to over a million dollars, including interest. This is as per information made available by FINRA on their website.
Supervision of employees is the responsibility of broker-dealers employing them. They are expected to have systems in place that allow for supervision and prevention of inappropriate conduct. Investment firms that fail to do so open themselves up for liability in case an employee’s misconduct lead to a claim from customers consequent to losses and/ or realization that the investment is unsuitable. FINRA makes available an arbitration route for such claims.
The FINRA sanctions against ONES pertain to the sale of variable annuities, for which the firm failed to establish a supervisory oversight. When one of their representatives recommended an unsuitable strategy to an investor, they failed to detect it and possibly prevent it. The strategy recommended to this investor required purchasing variable annuities by liquidating the retirement funds. This was followed by a withdrawal of funds from the annuities to purchase whole life insurance policies. The period during which this happened is March 2014 through to September 2017.
Recommending variable annuities in itself is not unusual, as these are instruments that are routinely sold to retirees and to people saving for retirement. However, broking firms are required to provide comprehensive protection to customers who purchase these instruments.
The matter came to light when the customer complained to ONES as well as to FINRA.
If you are concerned about the variable annuity or any other investments you have made through ONES, please feel free to speak to one of the securities attorneys at Haselkorn & Thibaut by calling 1-800-856-3352.
This information was obtained from public information. Haselkorn & Thibaut, an investor protection law firm, has offices in Florida, Texas, Arizona, North Carolina and New York.