Coastal Equities, Inc. (“Coastal Equities”) (CRD#23769) has many different complaints filed by FINRA (Financial Industry Regulatory Authority) and state regulatory organizations. At the Law Offices of Robert Wayne Pearce, we have investigated Coastal Equities, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against such organizations and its financial advisors.
If you believe you have a claim against Coastal Equities, you should strongly consider hiring an investment fraud 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 Coastal Equities?
If you’ve lost money caused by Coastal Equities and/or its employees’ misconduct then the answer is, YES, you can sue Coastal Equities, 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 Coastal Equities in FINRA arbitration proceedings but WIN that arbitration. The easiest way to know if you have a viable case against Coastal Equities is to call Attorney Pearce at our office at 800-732-2889.
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 Coastal Equities?
Coastal Equities (CRD#23769) 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, Coastal Equities 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.
Coastal Equities Has Many Different Regulatory Problems
Coastal Equities’ rapid growth has not been without consequences. There have been approximately 7 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 customer complaints regarding Coastal Equities 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. Capital Investment Group is a repeat offender: there are over 7 FINRA-reported proceedings citing the firm with one form of supervisory lapses or another.
A Brief Overview of Some of the Regulatory Problems Coastal Equities Has Faced Over the Years*
Coastal Equities 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 Censures and Fines Coastal Equities for Sales of Limited Partnerships After Knowing Issuer’s Financial Statement Audit was Incomplete
Brief Overview: Without admitting or denying the findings, Coastal Equities consented to the sanctions and to the entry of FINRA findings that it negligently failed to tell customers it solicited to invest in offerings related to an alternative asset management firm that the issuers failed to timely make required filings with the SEC. FINRA stated that the firm sold limited partnership interests in private sector companies after being notified that the delivery of the issuers’ audited financial statements would be delayed pending the completion of a forensic audit. The value of those sales totaled $3.05 million, and the firm received a total of $244,000 in commissions from the sales. According to FINRA, the firm’s representatives did not inform the customers that the issuers had not timely filed their audited financial statements with the SEC or the reasons for the delay. Such a delay in filing audited financials was material information that should have been disclosed, FINRA said. As a result, the firm was censured and fined $175,000.
FINRA Censures Coastal Equities for Failure to Supervise Registered Representative’s Excessive and Unsuitable Trading
Brief Overview: Without admitting or denying the findings, Coastal Equities consented to the sanctions and to the entry of FINRA findings that it failed to reasonably supervise a registered representative who recommended excessive and unsuitable trades in customer accounts. FINRA stated that the representative’s supervisor became aware that the representative was recommending excessive and unsuitable trading in the customers’ accounts, and that he was making unsuitable recommendations to purchase securities using margin in two of the customer’s accounts. According to FINRA, one of the customers was a retired, senior investor with a moderate risk tolerance. Indeed, the firm’s daily trade blotter showed the representative’s frequent trading and the correspondingly high turnover rates and commissions in the customers’ accounts. Considering the red flags, no one at the firm reviewed the customers’ accounts to determine whether the representative’s recommendations were suitable, questioned him about the trading in any of his customers’ accounts, or contacted the customers. As a result, the firm was censured and ordered to pay disgorgement totaling $270,320 plus interest.
FINRA Censures and Fines Coastal Equities for Proprietary Corporate Bond Purchases and Sales Practice
Brief Overview: Without admitting or denying the findings, Coastal Equities consented to the sanctions and to the entry of FINRA findings that it bought and/or sold corporate bond securities for its own account from and/or to a customer at an aggregate price that was not fair and reasonable. FINRA stated that the firm’s supervisory system concerning fair pricing of corporate bond securities did not provide for supervision reasonably designed to achieve compliance with respect to the applicable securities laws and regulations and FINRA rules. According to FINRA, the firm’s corporate bond exception report was insufficiently designed because it did not calculate mark ups or markdowns in percentage terms and did not account for trade desk markups and markdowns that were added to registered representative markups and markdowns. Additionally, the firm did not make its corporate bond exception report available to the firm’s corporate debt and municipals principal charged with reviewing the reasonableness of markups or markdowns. As a result, the firm was censured and fined $90,000.
FINRA Censures and Fines Coastal Equities for Exchange-Traded Fund Sales
Brief Overview: Without admitting or denying the findings, Coastal Equities consented to the sanctions and to the entry of FINRA findings that it failed to establish, maintain, and enforce a reasonably designed supervisory system for its representatives’ sales of leveraged, inverse, and inverse-leveraged exchange-traded funds. FINRA stated that the firm’s procedures required it to perform due diligence on each new product sold to customers to ensure that the firm and its representatives understood the nature of the product and its potential risks and rewards. In addition, the procedures also required the firm to determine whether the specific product was performing as anticipated, whether market conditions had affected performance, and whether only authorized and suitably trained representatives were selling the product. As a result, the firm was censured and fined.
New Jersey Bureau of Securities Fines Coastal Equities for Failure to Verify Unaffiliated RIA Firm’s Registration Status
Brief Overview: The New Jersey Bureau of Securities initiated an investigation into Coastal Equities that revealed the firm failed to have procedures in place to verify the state registration status of an unaffiliated RIA firm that used Coastal Equities’ brokerage platform to serve the unaffiliated RIA firm’s clients. Specifically, the bureau found that the unaffiliated RIA firm provided services to 9 client households in New Jersey, which exceeded by 4 the number of client households the unaffiliated RIA firm was permitted to serve without registration in New Jersey. As a result, the firm was fined $60,000.
*Above are only some of the regulatory disciplinary actions filed against Coastal Equities by FINRA. NASAA and other state securities regulator investigations and enforcement actions account for another 2 BrokerCheck disclosures.
Coastal Equities Customer Complaints
There have been scores of customer complaints filed against Coastal Equities stockbrokers and investment advisors over the years. We have launched many investigations of current and former Coastal Equities advisors:
If you have lost money investing with any of these Coastal Equities advisors 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 Coastal Equities Have So Many Regulatory Problems And Customer Complaints?
Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of many 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 Coastal Equities 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. Coastal Equities 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 Coastal Equities 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 Coastal Equities Today!
The investment loss 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 Coastal Equities 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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