Western International Securities, Inc. (“Western International Securities”) (CRD# 39262) 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 Western International 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 Western International in trouble?
Yes, Western International Securities continues to face significant regulatory problems. Most notably, there was a major new SEC settlement in July 2024 that represents one of their most serious regulatory issues to date.
The SEC reached a settlement agreement with Western International Securities on July 30, 2024, for violating Regulation Best Interest (Reg BI) by allowing a former representative to engage in day-trading options strategies that were not in retail customers’ best interests. This is separate from their previous violations and shows ongoing compliance issues.
A BRIEF OVERVIEW OF SOME OF THE COMPLAINTS AND REGULATORY PROBLEMS WESTERN INTERNATIONAL SECURITIES HAS FACED OVER THE YEARS
The most significant recent issue involved Western selling more than $13 million in high-risk debt securities (L Bonds) to investors with lower risk profiles, which violated best interest regulations designed to protect retail investors.
The firm has accumulated approximately 18 state and self-regulatory disclosure events over the years. Previous sanctions include a November 2022 FINRA action for supervisory failures regarding non-traded REITs, along with violations related to option position limits and non-traditional ETF supervision.
The pattern suggests systemic supervisory deficiencies rather than isolated incidents. The firm operates as an independent broker-dealer model, which regulatory experts note creates inherent supervision challenges since representatives often operate as separate businesses rather than traditional employees.
Recent individual complaints include a January 2024 case involving “misrepresentation of investment” seeking $5,000 in damages, and a December 2022 case involving “unsuitability and negligence” that settled for $150,000.
The July 2024 SEC settlement appears to be the most recent major regulatory action, indicating that Western International Securities continues to face scrutiny from federal regulators for compliance failures affecting retail investors.
Can I Sue Western International Securities?
Yes, you can sue Western International Securities if you have suffered financial losses due to the misconduct, negligence, or fraudulent actions of the firm or its brokers. However, most client agreements with Western International Securities require disputes to be resolved through FINRA arbitration rather than traditional court litigation.
With over 45 years of experience representing investors in FINRA proceedings, the Law Offices of Robert Wayne Pearce, P.A. has the knowledge and proven strategies to help you not only bring a claim against Western International Securities but also maximize your chances of recovering compensation for your losses.
Investment Losses? We Can Help
Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.
or, give us a ring at (800) 732-2889.
What is Western International Securities?
Western International Securities (CRD# 39262) 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, Western International 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 Western International Securities
Western International Securities’ rapid growth has not been without consequences. There have been approximately 18 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) and the North American Securities Administrators Association (NASAA) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against Western International 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 over many years. Western International Securities is a repeat offender: there are over 18 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 Western International Securities Has Faced Over the Years*
Western International Securities has been repeatedly censured, warned, and fined multi-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:
Western International Securities, Inc. Faces FINRA Sanctions for Non-Traded REIT Regulatory Violations
Brief Overview: Western International Securities, Inc. has consented to FINRA sanctions without admitting or denying findings that it failed to establish, maintain, and enforce a supervisory system for non-traded real estate investment trusts (REITs). The firm’s written supervisory procedures (WSPs) were found inadequate in ensuring compliance with suitability obligations related to non-traded REIT recommendations. Notably, the WSPs lacked specific guidance for supervisors, leading to inconsistent assessments of suitability, primarily relying on customer and broker representations. The firm received censure, a $400,000 fine, and was ordered to pay $471,401.57 in restitution to affected customers. Moreover, the firm must certify the implementation of enhanced supervisory systems and procedures for non-traded REIT sales and disclosure obligations. Partial restitution equivalent to the commissions received by the firm was provided to customers, and the fine was settled in full on November 16, 2022.
Western International Securities, Inc. Faces Regulatory Penalties for Option Position Limit Violation
Brief Overview: Western International Securities, Inc., without admitting or denying the findings, consented to sanctions and findings that it had executed opening transactions in a stock option contract on behalf of a customer, leading to the customer holding a position exceeding the applicable position limit for four consecutive business days. The findings revealed that the firm failed to establish and maintain a supervisory system, including written supervisory procedures (WSPs), reasonably designed to ensure compliance with option position limit requirements. The firm had no reporting mechanism to identify position limit overages and relied on its clearing firm for such notifications. Additionally, the WSPs lacked a description of a supervisory review process to determine if the firm or its customers exceeded option position limits. Subsequently, the firm updated its WSPs to address these deficiencies. As part of the sanctions, the firm received a $400,000 fine and was required to provide restitution and partial restitution totaling $471,401.57.
Western International Securities, Inc. Faces FINRA Sanctions Over Non-Traditional ETFs Supervision
Brief Overview: Western International Securities, Inc. has consented to FINRA sanctions without admitting or denying the findings, acknowledging its failure to establish, maintain, and enforce a supervisory system and written supervisory procedures (WSPs) designed to ensure that recommendations made by registered representatives concerning leveraged, inverse, and inverse-leveraged Exchange-Traded Funds (non-traditional ETFs) complied with applicable securities laws and regulations, as well as FINRA rules. The firm lacked written policies and procedures addressing the unique features and risks associated with non-traditional ETFs and had no effective system to monitor the peculiar risks posed by these products, especially the risk related to long-term holding of a product that resets daily. Furthermore, the firm did not perform a suitable reasonable basis analysis of non-traditional ETFs before offering them to retail customers and, in some cases, recommended these products to conservative customers with modest financial situations, including some elderly clients, resulting in unsuitable purchases. As part of the sanctions, Western International Securities, Inc. was censured, fined $175,000, and ordered to pay $521,098.10 in restitution to customers, with fines paid in full on March 20, 2018.
*Above are only some of the regulatory disciplinary actions filed against Western International Securities by FINRA. NASSA and other state securities regulator investigations and enforcement actions account for another 18 BrokerCheck disclosures.
Why Does Western International 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 on-site manager, compliance officer and operation 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 onsite 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. Oftentimes 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 Western International Securities Advisor or one of its brokers with FINRA
If you are wondering how to file an official complaint against Western International Securities, Inc. (CRD #39262) or one of its brokers with FINRA, you are not alone. The firm has faced repeated regulatory sanctions, customer complaints, and federal enforcement actions, including a July 2024 SEC settlement for violating Regulation Best Interest (Reg BI) tied to unsuitable day-trading options strategies. Western International Securities has also been cited for selling high-risk L Bonds, supervisory failures related to non-traded REITs, and violations involving non-traditional ETFs and option position limits.
At the Law Offices of Robert Wayne Pearce, P.A., our investment fraud attorneys have spent over 45 years representing investors in FINRA arbitration claims against firms like Western International Securities. We understand the complexities of filing a FINRA complaint and pursuing recovery when firms breach their fiduciary duties or engage in misconduct. Unfortunately, many investors lose their cases after contacting firms directly without legal representation—something regulators themselves warn against.
If your accounts have suffered losses due to misconduct by Western International Securities or its advisors, we can guide you through the FINRA arbitration process, protect your rights, and fight for the compensation you deserve.
These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Western International Securities without representation with an attorney about their complaints and have their complaints denied.
Related Read: Can You Sue Your Brokerage Firm?
Investment Losses? We Can Help
Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.
or, give us a ring at (800) 732-2889.
Consult With An Attorney Who Recovers Investment Losses Caused By Western International Securities Today!
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 Western International 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.
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