Violation Tracker Memo as of April 2018

Even with the 2008-2009 financial crisis in the rear-view mirror, some of the most trusted names in the financial services industry have paid substantial fines and penalties since 2010. Goodjobsfirst.org/ViolationTracker.com and FINRA Brokercheck websites provide the following examples:

Bank of America

Contents

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Bank of America total over $56 billion. This appears to include over $585 million for investor protection violations and over $20 million in securities trading violations and/or financial institution supervision failures.

Merrill Lynch

Merrill Lynch Pierce Fenner & Smith

Although included in Bank of America fine and penalty totals, according to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Merrill Lynch total over $415 million for investor protection violations, including over $131 million for toxic securities abuses.

JP Morgan

JP Morgan Chase

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for JP Morgan Chase total over $28 billion. This appears to include over $271 million for investor protection violations, and over $153 million for toxic securities abuses by JP Morgan Securities LLC, over $4 million for investor protection violations by JP Morgan Securities LLC as well as $267 million in fines and penalties paid by JP Morgan Securities LLC and JP Morgan Bank, NA. The broker-dealer firm has at least 297 disclosures, approximately 140 of which are customer complaint disclosures. Among other issues, there was a misleading investors issue related to CDO investments in 2011, and a LIBOR rigging scandal issue in 2013, as well as several Madoff-related issues in 2014.

Wells Fargo

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Wells Fargo total over $1.5 billion in toxic securities abuses, including over $16 million paid by Wells Fargo Securities LLC and Wells Fargo Advisors.

Goldman Sachs

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) total over $8.7 billion, much of it in toxic securities abuses, and also including $22 million for supervision failures by Goldman Sachs & Co.

Morgan Stanley

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Morgan Stanley total over $4.96 billion. This appears to include over $4.4 billion of toxic securities abuses, over $280 million in financial institution supervision failures, over $17 million of investor protection violations, and nearly $6.5 million in securities trading violations.

Deutsche Bank

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Deutsche Bank total over $4.5 billion. This appears to include over $2.2 billion of toxic securities abuses and $55 million investor protection violations.

HSBC

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for HSBC total over $4 billion. This appears to include over $12.5 million of investor protection violations. HSBC appears to have a record of at least 59 disclosures of regulatory events or customer complaints, and it was fined $1.5 million in April 2010 for issues related to the sale of Auction Rate Securities.

Barclays

Barclay’s Capital

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Barclays total over $3.37 billion. This appears to include over $605 million of toxic securities abuses, $35 million of investor protection violations, and $800,000 in financial institution supervision failures. This also includes $15 million by Barclays Capital Inc. for securities trading violations. It is believed that Barclay’s Capital purchased the core capital markets businesses of Lehman Brothers during the financial crisis in 2008. Since 2010, according to Violation Tracker website, Barclays has paid over $132 million in fines relating to investor protection violations.

Credit Suisse

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Credit Suisse total over $3.2 billion. This appears to include over $1.0 billion of toxic securities abuses and over $250 million of investor protection violations.

UBS

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for UBS total over $3.3 billion. This appears to include over $1 billion of toxic securities abuses, over $78 million of investor protection violations, $15 million for financial institution supervision failures, and over $8 million in securities trading violations. UBS has also been the target of hundreds of customer complaints in Puerto Rico in connection with its sale of Puerto Rican issued debt securities.

SunTrust Banks

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for SunTrust Banks total over $1.5 billion. This appears to include over $65 million of toxic securities abuses.

ABN AMRO

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for ABN AMRO total over $501 million. This appears to include over $1 million of securities trading violations.

Royal Bank of Scotland (RBS)

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for RBS total nearly $1.9 billion. This appears to include over $382 million of toxic securities abuses and nearly $154 million toxic securities abuses by affiliates.

State Street

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for State Street total over $708 million. This appears to include over $696 million of investor protection violations.

AXA

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for AXA total $242 million of investor protection violations. In March 2012 (upon information and belief), the firm was fined again by regulators for not axing a Ponzi scheme sooner and/or for failures to reasonably supervise related to same. The firm is believed to have approximately 5,800 representatives, and it is believed that the parent company of the BD firm was fined $20 million by New York insurance regulators in March 2014 based on allegations relating to variable annuity contract issues.

Raymond James

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Raymond James total over $200 million. This appears to include $200 million of toxic securities abuses (through affiliate Morgan Keegan) and $500,000 in securities trading violations.

Fifth Third Bank

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Fifth Third Bancorp total as much as $113 million and involved toxic securities abuses, consumer protection violations, and accounting fraud or deficiencies (among other issues). This appears to include $85 million of toxic securities abuses, and the firm also settled an SEC matter for $1.95 million that involved allegations of a failure to properly supervise related to securities issuance or trading violations.

MassMutual

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Mass Mutual total over $36 million of investor protection violations, including $35 million paid by Oppenheimer Funds for investor protection violations.

Royal Bank of Canada (RBC)

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for RBC total nearly $66 million. This appears to include over $35 million in securities trading violations and over $30 million of investor protection violations, including $31 million paid by RBC Capital Markets, LLC to the SEC.

Oppenheimer

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Oppenheimer total over $20 million. This appears to include securities trading violations and investor protection violations by Oppenheimer & Co., Inc.

Edward Jones & Co.

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Edward Jones total $20 million of investor protection violations.

Legg Mason

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Legg Mason total over $19 million for investor protection violations, including fines and penalties applicable to Western Asset Management.

Toronto-Dominion Bank (TD)

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for TD total over $52 million, including $15 million for investor protection violations and over $10 million paid by TD Ameritrade for financial institution supervision failures and investor protection violations.

Nationwide

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Nationwide total $8 million for investor protection violations.

Regions Financial

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Regions total over $54 million, including over $1 million of investor protection violations by Regions Bank.

E-Trade

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for E-Trade total $2.5 million paid to the SEC.

Scottrade

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Scottrade total $2.5 million paid to the SEC.

Janney Montgomery Scott (JMS)

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Janney Montgomery total $850 million for financial institution supervision failures. This Philadelphia-based firm has at least 45 disclosures of regulatory or customer complaint issues.

Piper Jaffray

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Piper Jaffray total $750,000 in securities trading violations.

Stifel Nicolaus

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) total $500,000 for Stifel regarding investor protection violations and securities trading violations.

Charles Schwab

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for Schwab total over $118 million for investor protection violations.

Bank of New York Mellon (BNY Mellon)

BNY Capital Markets, LLC

According to the Violation Tracker website (goodjobsfirst.org/violation-tracker.com), penalty and fines (since 2010) for BNY Mellon total nearly $735 million in securities trading violations. In addition, it is believed that BNY Mellon has paid $6.6 million relating to investor protection violations since 2010.

Aegis Capital Corp.

In March 2017, Investment News reported the firm is facing an investigation from FINRA, SEC, and FinCen. The firm’s FINRA brokercheck (at that time) was reporting approximately 26 disclosures, including one or more in recent years relating to its written supervisory procedures.

Ameriprise Financial Services

In 2013, the firm is believed to have been fined by FINRA some $750,000, and then fined again by FINRA in 2016 for $850,000 for a failure to supervise. With nearly 10,000 financial consultants, Ameriprise is one of the largest investment companies operating in the United States. This Minneapolis-based company reports that it is managing over $800 billion in assets and that it earned over $1.3 billion in 2016.

Robert W. Baird (Baird)

It is believed the company was fined by the SEC for $250,000 in September 2016 for allegedly failing to establish procedures to determine what clients were being charged in commissions beyond certain wrap fees.

BB&T Securities LLC

BB&T Investment Services, Inc.

Note that Scott & Stringfellow LLC is a division of BB&T Securities. In August 2016, it is believed the firm received an SEC Cease & Desist related to Four-Squared investments and Alpha Sector Strategy, as there may have been a separate $2.2 million fine for the firm allegedly spreading false claims made by Four-Squared (as reported by InvestmentNews.com in August 2016).

BNP Paribas Securities Corporation

According to the Violation Tracker website, the firm has paid approximately $140,000 in securities issuance and trading violations since 2010.

Brown Brothers Harriman & Co.

Brown Brothers Harriman Investments, LLC

FINRA has fined the firm $8 million for compliance failures in February 2014.

Cabot Lodge Securities, LLC

In May 2015, the firm agreed to a FINRA fine relating to alleged net capital requirement issues.

Also in 2015, a former compliance officer filed a claim against the firm in New York alleging (among other claims) fraudulent activities relating to non-traded REIT investments such as United Realty Trust, Inc.

Cadaret, Grant & Co., Inc.

The firm is based out of Syracuse, New York, and is believed to have over 900 representatives in over 500 branch offices. In 2017, the firm was cited by FINRA for a failure to reasonably supervise. In 2008, there appears to be a FINRA fine relating to variable annuity transaction issues and an alleged failure to have an adequate system or adequate procedures in place to supervise the transactions. In that same year, FINRA also fined the firm based on its failure to establish an effective supervisory system relating to breakpoints and discounts for Unit Investment Trust (UIT).

Calton & Associates, Inc.

This firm is believed to have had nine regulatory sanctions and multiple customer complaints alleging (among other claims) unsuitable investment recommendations and a failure to supervise. In 2009, the Florida Office of Financial Regulation sanctioned the firm due to allegations involving seminar advertising and sales literature issues.

Cetera Advisor Network, LLC

Cetera Advisors LLC

Cetera Financial Specialists LLC, and Cetera Investment Services, LLC.

The firms have approx. 6,500 advisors and a history of seven regulatory disclosures and a number of customer complaint allegations. In July 2006, the firm was sanctioned and fined $3.4 million. In November 2016, FINRA sanctioned the firm based on allegations relating to variable annuity sales issues. Cetera also owns Investor’s Capital, which was fined in 2017 based on allegations relating to Unit Investment Trusts (UITs).

David Lerner Associates, Inc.

In October 2012, FINRA fined the firm $14 million relating to allegedly unfair sales practices involving Apple REIT securities. In May 2017, the State of New Jersey fined the firm $650,000 for alleged suitability and compliance as well as books and record violations relating to sales of non-traded REIT investments.

Dawson James Securities, Inc.

This Boca Raton, Florida-based company is believed to have had an October 2011 fine of $90,000 from FINRA for alleged violations relating to net capital requirements as well as alleged books and records issues. In June 2014, the firm was fined $75,000 for allegedly not maintaining adequate written supervisory procedures.

First Allied Securities, Inc.

The firm appears to have 16 or more regulatory disclosures and numerous customer complaints, as well as what appear to be FINRA fines in November 2016 related to issues involving variable annuities.

H.J. Sims & Co. (Herbert J. Sims & Co., Inc.)

According to FINRA brokercheck, the firm is based in Fairfield, Connecticut, and has five reported disclosures. See FINRA brokercheck. Financial Industry Regulatory Authority (FINRA) requires brokers and brokerage firms to publicly disclose reportable events (including material customer complaints, IRS tax liens, judgments, certain criminal matters, etc.) on the Central Registration Depository (CRD) system.

J.J.B. Hilliard, W.L. Lyons, LLC

The firm discloses at least 33 regulatory or customer complaints. In August 2016, the SEC accepted a $200,000 fine with the firm related to allegations involving negligence and F-squared investments and Alpha Sector Strategy.

Jefferies LLC

The broker-dealer records with FINRA reflect 64 disclosures of regulatory and/or customer complaint issues. In 2006, there was a $5.5 million fine related to improper gifts and entertainment. In 2011, there was a $1.5 million FINRA fine related to sales of Auction Rate Securities. In 2014, SEC charges were settled for $25 million, where it was alleged that Jefferies did not properly supervise traders.

Ladenburg Thalmann & Co., Inc.

The firm has at least 35 individual disclosures of regulatory or customer complaint issues. In August 2016, the firm was fined by the SEC for improperly passing along inaccurate performance information related to investments in F-Squared. There were additional fines against the firm by the regulators in 2003, 2004, 2005, and 2009.

Lincoln Financial Advisors Corp.

The firm has at least 14 individual regulatory or customer complaint disclosures reported. In 2010, the firm was fined for negligence in failing to prevent one of its advisors from operating a selling away fraud or Ponzi-type scheme. FINRA has previously fined the firm including one fine of $650,000 for failing to properly protect client data. In 2015, FINRA also fined the firm $175,000 along with ordering $5.6 million in restitution to customers for alleged failures to properly supervise.

LPL Financial, LLC

This firm has over 13,000 representatives operating out of 6,500 offices. The firm has over 100 individual regulatory or customer complaint disclosures. In 2017, the Massachusetts Securities Division fined the firm $1 million for failing to properly supervise its advisors. In 2015, FINRA fined the firm $11.7 million for alleged widespread supervisory failures. In 2013, FINRA also fined the firm $9 million.

Mesirow Financial, Inc.

According to FINRA brokercheck, the firm is based in Chicago and has 19 reported disclosures. Financial Industry Regulatory Authority (FINRA) requires brokers and brokerage firms to publicly disclose reportable events (including material customer complaints, IRS tax liens, judgments, certain criminal matters, etc.) on the Central Registration Depository (CRD) system.

Money Concepts Capital Corp.

According to FINRA brokercheck, the firm is based in Palm Beach Gardens, Florida, and has 10 reported disclosures. Financial Industry Regulatory Authority (FINRA) requires brokers and brokerage firms to publicly disclose reportable events (including material customer complaints, IRS tax liens, judgments, certain criminal matters, etc.) on the Central Registration Depository (CRD) system.

National Financial Services, LLC

According to FINRA brokercheck, the firm is based in Boston and has 52 reported disclosures. Financial Industry Regulatory Authority (FINRA) requires brokers and brokerage firms to publicly disclose reportable events (including material customer complaints, IRS tax liens, judgments, certain criminal matters, etc.) on the Central Registration Depository (CRD) system.

Newbridge Securities Corp.

This Boca Raton, Florida-based broker-dealer firm was under investigation in 2012 by the Florida Office of Financial Regulation. According to Wealthmanagement.com, that investigation (at that time) was just the latest in a long trail of regulatory woe for this firm, whose executives and brokers have fallen afoul of securities laws repeatedly since 2000. In 2015, FINRA sanctioned the firm based on allegations relating to unfair trading practices and an inadequate supervisory system involving bond transactions.

Northern Trust Securities, Inc.

According to FINRA brokercheck, the firm is based in Chicago and has seven reported disclosures. Financial Industry Regulatory Authority (FINRA) requires brokers and brokerage firms to publicly disclose reportable events (including material customer complaints, IRS tax liens, judgments, certain criminal matters, etc.) on the Central Registration Depository (CRD) system.

NYLife Securities, LLC

According to FINRA brokercheck, the firm is based in New York and has 19 reported disclosures. Financial Industry Regulatory Authority (FINRA) requires brokers and brokerage firms to publicly disclose reportable events (including material customer complaints, IRS tax liens, judgments, certain criminal matters, etc.) on the Central Registration Depository (CRD) system.

PFS Investments, Inc.

According to FINRA brokercheck, the firm is based in Duluth, Georgia, and has 22 reported disclosures. Financial Industry Regulatory Authority (FINRA) requires brokers and brokerage firms to publicly disclose reportable events (including material customer complaints, IRS tax liens, judgments, certain criminal matters, etc.) on the Central Registration Depository (CRD) system.

Popular Securities, LLC

According to FINRA brokercheck, the firm is based in San Juan, Puerto Rico, and has nine reported disclosures. Financial Industry Regulatory Authority (FINRA) requires brokers and brokerage firms to publicly disclose reportable events (including material customer complaints, IRS tax liens, judgments, certain criminal matters, etc.) on the Central Registration Depository (CRD) system.

Raymond James Financial Services, Inc.

Raymond James & Associates, Inc.

Combined, these two firms have at least 346 regulatory and customer complaint disclosures reported in their CRDs. The firm is based in St. Petersburg, Florida, and it has paid fines and penalties totaling over $204 million since 2000 for alleged toxic securities abuses, securities issuance or trading violations, and investor protection violations.

Securities Service Network, Inc.

The firm is based in Knoxville, Tennessee, and has approximately 450 representatives. In 1999, the firm was fined by the Florida Division of Securities for operating an unregistered branch office. In 2013, the firm was fined for allegedly failing to establish a reasonable system of supervision. The firm is believed to have disclosed in 2017 at least 13 individual regulatory or customer complaint issues.

Summit Brokerage Services, Inc.

The firm is based in Boca Raton, Florida, and is believed to have over 850 representatives operating from a total of 400 branch offices. The firm discloses at least 20 individual regulatory or customer complaint issues. In 2016, the firm was fined for allegedly allowing unsuitable investments and failing to adequately train and inform the sales force, as well as failing to properly maintain an adequate supervisory system. In 2016, FINRA also is believed to have fined the firm $500,000 relating to allegations involving variable annuity issues. In 2013, the firm was alleged to have failed to reasonably supervise its business even after being notified by the Arkansas Securities Department regarding certain activities.

National Securities Corporation

The firm is based in Seattle, and it is believed to have over 775 representatives. The firm discloses 78 regulatory or customer complaints. In 2004, the firm was fined by FINRA (then NASD) $300,000. In 2011, the firm was fined $175,000 for allegations related to sales of high-risk investment products. In 2013, the firm was fined for alleged failure to properly maintain accurate books and records. In 2015, the firm was fined and censured based on allegations related to supposed late filings of Form U-4s and Form U-5s.

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