CFD Investments, Inc. (“CFD Investments”)(CRD# 25427) 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 CFD Investments, 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.
If you believe you have a claim against CFD Investments, you should strongly consider hiring an investment loss lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. 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.
Can I Sue CFD Investments, Inc.?
If you’ve lost money caused by CFD Investments and/or its employees’ misconduct then the answer is, YES, you can sue CFD Investments but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue CFD Investments in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against CFD Investments is to call Attorney Pearce at our office at 800-732-2889.
What is CFD Investments, Inc.?
CFD Investments (CRD# 25427) has been registered with the SEC and FINRA as a broker dealer since 1990. The company is controlled by the, the Owen’s family and headquartered in Kokomo, Indiana with small branch offices located throughout the United States. Its independent broker-dealer Business Model has grown through acquisition and organic development of primarily one and two person registered representative offices supervised remotely. Today there are over 150 registered representatives in every state. It is now one of the 50 largest independent broker-dealer and investment advisory firms in the United States.
CFD Investments, Inc. Has Many Different Regulatory Problems
CFD Investments’ rapid growth has not been without consequences. There have been approximately 7 Federal, 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 scores of customer complaints filed against CFD Investments 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. CFD Investments is a repeat offender: there are over 5 FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another in the last decade.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS CFD INVESTMENTS, INC. HAS FACED OVER THE YEARS*
CFD Investments has been repeatedly censured, warned, and fined 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:
FINRA Orders CFD Investments To Pay $750,000 For Due Diligence Failures
FINRA investigated and discovered CFD Investments approved an oil and gas private placement offering for sale to its customers without adequate due diligence. The issuer, Payson Petroleum, Inc. was the subject of an jury verdict in excess of $9 million and was in financial distress. Yet, CFD Investments sold interests in Payson to 31 of its retail customers, without conducting reasonable due diligence into the Payson offering. By failing to conduct reasonable due diligence into the Payson offering, CFD Investments and Bahrenburg violated NASD Rule 3010, and FINRA Rules 3110 and 2010.
In addition, FINRA found CFD Investments sold interests in Payson to its customers without having a reasonable basis for making recommendations to purchase this private placement. CFD Investments customers who invested in Payson lost their investments when Payson filed for bankruptcy. Through this conduct, CFD Investments violated FINRA Rules 2111 and 2010.
Further, FINRA found CFD Investments also failed to disclose to its customers that it received additional compensation from Payson beyond the disclosed sales compensation. This conduct violated FINRA Rule 2010.
Accordingly, FINRA sanctioned CFD Investments by imposing a censure, a 45 day suspension of any and all private placement activities, and restitution in the amount of $750,000 to the affected customers.
FINRA Sanctioned CFD Investments For Variable Annuity Sales Abuse
In another one of FINRAs investigations, it found that CFD Investments failed to establish, maintain and enforce a supervisory system and written supervisory procedures reasonably designed to ensure that representatives’ recommendations of variable annuities complied with applicable securities laws and regulations and FINRA Rules. As a result, FINRA concluded CFD Investments violated FINRA Rules 2330(d) and (e), NASD Rule 3010, FINRA Rule 3110, and FINRA Rule 2010 for which it was censured and fined hundred and $25,000.
FINRA Sanctioned CFD Investments For ETF Sales Abuse
During the course of another FINRA sales practice investigation, the regulator found CFD Investments failed to establish, maintain, and enforce a reasonable supervisory system designed to ensure the review of its representatives’ sales of leveraged and inverse exchange-traded funds (”Non- Traditional ETFs”), in violation of NASD Rule 3010 and FINRA Rule 2010 and imposed a censure and $30,000 fine upon the brokerage firm.
FINRA Sanctioned CFD Investments For Supervisory Failures
During the course of yet another FINRA investigation, it discovered CFD Investments failed to adequately supervise former registered representative John Haeffele, who stole approximately $409,000 from a customer’s accounts that held direct application mutual funds purchased through CFD Investments. The customer was a trust established to provide financial support for a severely disabled beneficiary (the “Trust”). FINRA found Haeffele converted the Trust’s funds by redeeming the mutual fund shares owned by the Trust and transferring the proceeds to accounts he controlled away from CFD Investments.
As a result of its investigation, FINRA believed that CFD Investments was aware of red flags relating to Haeffele that taken as a whole would have led it to investigate, and discover his conversion of Trust assets. Among other things, Haeffele served both as trustee and registered representative for the Trust, which raised a conflict of interest and allowed him to receive Trust account statements. He also began redeeming mutual fund shares held by the Trust shortly after purchase, which raised suitability concerns because it was inconsistent with the Trust’s intent in investing in mutual funds. CFD Investments failed to adequately respond to these and other red flags. As such, FINRA concluded CFD Investments failed to supervise Haeffele in violation of NASD Rules 3010(a) and 2110, and FINRA Rule 2010.
CFD Investments supervisory failures resulted, in part, from its deficient supervisory systems and written procedures for monitoring direct application mutual fund redemptions. CFD Investments had two means of reviewing such redemptions – dealer statements and transaction blotters created by representatives yet CFD Investments failed to utilize either means to review this activity. Moreover, CFD Investments lacked written procedures requiring the review of dealer statements. By failing to maintain adequate supervisory systems and procedures, CFD Investments violated NASD Rules 3010(a) and (b) and 2110, and FINRA Rule 2010.
Last, the FINRA investigation revealed CFD Investments failed to maintain daily blotters that contained all direct application mutual fund redemptions, in violation of Section 17(a) of the Exchange Act, Rules 17a-3 and 17a-4, NASD Rules 3110 and 2110, and FINRA Rule 2010. Notwithstanding, FINRA only slapped CFD Investments on its and an imposed a censure and a fine of only, $100,000.
*Above are only some of the regulatory disciplinary actions filed against CFD Investments by FINRA. There are at least 3 more SEC, FINRA, NASSA, and/or state securities regulator investigations and enforcement actions reported on BrokerCheck as regulatory disciplinary proceeding disclosures.
CFD Investments Customer Complaints
There have been many complaints filed against CFD Investments stockbrokers and investment advisors over the years. We have launched a number of investigations of current and former CFD Investments advisors, including:
If you have lost money investing with a CFD Investments advisor or others within this brokerage firm, it’s important that you reach out to an investment loss attorney quickly because the statutes of limitations can bar your claims. Call us at 800-732-2889.
Why Does CFD Investments, Inc. 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.
Did CFD Investments, Inc. Advisor Misconduct Cause You Investment Losses?
When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. CFD Investments is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. 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 CFD Investments without representation with an attorney about their complaints and have their complaints denied.
Related Read: Can You Sue Your Brokerage Firm?
Consult With An Attorney Who Recovers Investment Losses Caused By CFD Investments, Inc. Today!
The securities attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with CFD Investments 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.