$1.85 Million Paid to Customers
WASHINGTON–(BUSINESS WIRE)–The Financial Industry Regulatory Authority (FINRA) announced today that
it has fined Oppenheimer & Co. Inc. $1.575 million and ordered the firm
to pay $1.85 million to customers for failing to report required
information to FINRA, failing to produce documents in discovery to
customers who filed arbitrations, and for not applying applicable sales
charge waivers to customers.
Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement,
said, “It’s important for firms to ensure their supervisory programs are
designed to comply with FINRA reporting requirements, and that their
procedures provide adequate direction to their employees to make
required filings. FINRA uses this information to identify and initiate
investigations of firms and associated persons that pose a risk to
FINRA found that over a span of several years, Oppenheimer failed to
timely report to FINRA more than 350 required filings including
securities-related regulatory findings, disciplinary actions taken by
Oppenheimer against its employees, and settlements of securities-related
arbitration and litigation claims. FINRA rules require firms to timely
and accurately report required information, yet Oppenheimer’s procedures
did not provide direction to its employees on making these disclosures.
On average, Oppenheimer made these filings more than four years late.
Oppenheimer also failed to timely disclose that its then
Anti-Money-Laundering Compliance Officer and another employee had
received Wells notices from the Securities and Exchange Commission.
Oppenheimer had revised its supervisory procedures as a result of a
prior FINRA investigation but failed to adopt adequate procedures that
addressed a specific obligation to report regulatory events involving
In addition, FINRA found that between 2010 and 2013, Oppenheimer failed
to produce relevant documents during discovery to seven arbitration
claimants who alleged Oppenheimer failed to supervise former registered
representative Mark Hotton. Oppenheimer failed to provide spreadsheets
showing that Mark Hotton had excessively traded multiple customer
accounts. Oppenheimer has paid more than $6 million to resolve customer
arbitration claims related to its supervision of Hotton. Additionally,
FINRA had previously ordered
Oppenheimer to pay $1.25 million in restitution to 22 additional
customers who suffered losses but had not filed arbitration claims. In
today’s action, FINRA is ordering Oppenheimer to provide the seven
claimants with copies of the respective documents that were not
produced, and payments totaling more than $700,000.
FINRA also found that Oppenheimer failed to reasonably supervise the
application of sales charge waivers to eligible mutual fund sales. The
firm relied on its financial advisors to determine the applicability of
sales charge waivers, but failed to maintain adequate written policies
or procedures to assist financial advisors in making this determination.
As a result of today’s action, Oppenheimer has paid eligible customers
$1.14 million in remediation to customers who qualified for, but did not
receive, applicable mutual fund sales charge waivers.
In settling this matter, Oppenheimer neither admitted nor denied the
charges, but consented to the entry of FINRA’s findings.
Investors can obtain more information about, and the disciplinary record
of, any FINRA-registered broker or brokerage firm by using FINRA’s
BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2015,
members of the public used this service to conduct 71 million reviews of
broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck
or by calling (800) 289-9999. Investors may find copies of this
disciplinary action as well as other disciplinary documents in FINRA’s
Disciplinary Actions Online database. Investors can also call FINRA’s
Securities Helpline for Seniors at (844) 57-HELPS for
assistance or to raise concerns about issues they have with their
brokerage accounts and investments.
FINRA, the Financial Industry Regulatory Authority, regulates all
securities firms doing business in the United States. FINRA is dedicated
to investor protection and market integrity through effective and
efficient regulation and complementary compliance and technology-based
services. FINRA touches virtually every aspect of the securities
business – from registering and educating all industry participants to
examining securities firms, writing rules, enforcing those rules and the
federal securities laws, and informing and educating the investing
public. In addition, FINRA provides surveillance and other regulatory
services for equities and options markets, as well as trade reporting
and other industry utilities. FINRA also administers the largest dispute
resolution forum for investors and firms. For more information, please