First Allied Securities, Inc. has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself.
At the Law Offices of Robert Wayne Pearce, we have investigated First Allied Securities, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.
Is First Allied Securities in Trouble?
Yes, First Allied Securities has significant ongoing regulatory and compliance issues. First Allied Securities ceased operating independently as of September 12, 2022, after merging into Cetera Financial Group, Cetera Wraps First Allied into Adviser Business | PLANADVISER. However, the regulatory problems have continued under Cetera’s ownership.
Most notably, in September 2024, the SEC filed enforcement actions against both First Allied Advisory Services and Cetera Investment Advisers for failure to supervise two investment adviser representatives who engaged in fraudulent “cherry-picking” schemes from 2015 through 2022 First Allied Advisory Services, Inc. and Cetera Investment. This represents one of the most recent and significant regulatory actions involving the firm.
A BRIEF OVERVIEW OF SOME OF THE COMPLAINTS AND REGULATORY PROBLEMS FIRST ALLIED SECURITIES HAS FACED OVER THE YEARS
First Allied Securities has an extensive history of regulatory violations and customer complaints. The firm has over 34 FINRA-reported disciplinary proceedings citing various supervisory lapses First Allied Securities: Customer Complaints & Regulatory Actions, making it what regulators consider a “repeat offender.”
The firm’s disciplinary history includes multiple significant fines and sanctions. First Allied was fined $950,000 by FINRA for failure to appropriately supervise the sales of structured products between October 2006 and January 2012 First Allied Securities: Customer Complaints & Regulatory Actions. In 2017, the firm was censured and required to pay approximately $876,915 in restitution to eligible customers for mutual fund sales-charge waivers First Allied Customer Complaints – The White Law Group.
Individual broker misconduct has also plagued the firm. FINRA barred former First Allied broker Chad Barancyk on September 19, 2022, after eight advisory clients filed complaints alleging unsuitable investments and misrepresentation First Allied Customer Complaints – The White Law Group. Another former broker, Anthony Diaz, was sentenced to more than 17 years in prison for defrauding clients and was ordered to pay more than $4 million in damages First Allied Customer Complaints – The White Law Group.
The problems appear to stem from the firm’s business model as an independent broker-dealer with limited on-site supervision. The typical supervisory organization relies on geographically remote offices with supervisors who are not devoted full-time to oversight, leaving investors vulnerable to sales of securities that have not been properly reviewed First Allied Securities: Customer Complaints & Regulatory Actions.
Even after the Cetera merger, regulatory issues persist, with the 2024 SEC enforcement action demonstrating that supervisory failures continued through at least 2022, affecting clients who suffered losses from fraudulent trade allocation schemes that went undetected for years.
Can I Sue First Allied Securities?
Yes, you can sue First Allied Securities if you have lost money due to the misconduct or negligence of the firm or its employees. However, in most cases, investors signed agreements that waive their right to sue in court and instead require disputes to be resolved through a FINRA arbitration proceeding. The good news is that arbitration can still be a powerful avenue for recovery.
What is First Allied Securities?
First Allied Securities (CRD# 32444) is a registered broker-dealer. It operates as a full-service independent broker-dealer, providing a range of financial products and services to individual investors and financial advisors.
As a registered broker-dealer, First Allied Securities is subject to regulations and oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is required to comply with industry standards and regulations to ensure the protection of its clients’ interests.
A failure to comply with industry standards by either its brokers or the firm itself can result in disciplinary actions, fines, or other penalties imposed by regulatory authorities.
Examples of Regulatory Problems and Complaints for First Allied Securities
First Allied Securities’ rapid growth has not been without consequences. There have been approximately 34 state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against First Allied Securities for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record.
We have reported and written about these regulatory problems and customer complaints for many years. First Allied Securities is a repeat offender: there are over 34 FINRA-reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.
A Brief Overview of Some of the Complaints and Regulatory Problems First Allied Securities Has Faced Over the Years
First Allied Securities has been repeatedly censured, warned, and fined millions of dollars for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:
First Allied Securities Fined For Failure To Supervise Structured Products Sales
Brief Overview: First Allied Securities, Inc., a San Diego-based broker-dealer, has been fined $950,000 by FINRA for its failure to appropriately supervise the sales of structured products to its retail customer base. The firm lacked written supervisory procedures and supervision systems to identify and prevent unsuitable structured product sales.
This violation of FINRA Rule 2010 and NASD Rules 2110 and 3010 occurred between October 2006 and January 2012. Additionally, First Allied Securities was cited for failing to supervise non-traditional exchange-traded funds (ETFs) and consolidated reports, leading to further violations of FINRA Rule 2010 and Rule 3010. The firm’s supervisory failures included inadequate monitoring of holding periods for non-traditional ETFs and insufficient verification of asset valuations in consolidated reports.
First Allied Securities Fined for Mutual Fund Sales-Charge Waivers and Variable Annuities Supervision Failure
Brief Overview: First Allied Securities has faced several disciplinary actions resulting in fines and ordered restitution. In August 2017, the firm was censured and required to pay approximately $876,915 in restitution to eligible customers for mutual fund sales-charge waivers. In November 2016, FINRA fined First Allied and four other Cetera firms for failure to supervise the sales of variable annuities, leading to ordered restitution to investors.
Why Does First Allied Securities Have So Many Regulatory Problems And Customer Complaints?
Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise-type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with an on-site manager, compliance officer, and operational personnel.
The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.
The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters.
The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance, and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers.
Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence, and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative, earning a commission.
There may be no one on-site to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition, to document the suitability of a particular investment recommendation. Oftentime,s there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.
These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.
How to File an official Complaint Against First Allied Securities or One of its Brokers, with FINRA
File a formal complaint against First Allied Securities with FINRA if you’ve suffered financial losses due to misconduct, negligence, or fraud by its brokers. At The Law Offices of Robert Wayne Pearce, we have over 45 years of experience holding firms like First Allied accountable through FINRA arbitration.
With a proven record handling investment loss claims, including those involving First Allied’s supervisory failures and fraudulent schemes, we know how to position your case for maximum recovery. Don’t contact the firm without legal representation, protect your rights and take action today.
Related Read: Can You Sue Your Brokerage Firm?
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The investment loss attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 45 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with First Allied Securities cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.
Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.