Crown Capital Securities, L.P. (“Crown Capital”) (CRD# 6312) has several complaints filed by the U.S. Securities Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Crown Capital, 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 Crown Capital, 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 Crown Capital Securities, L.P.?
If you’ve lost money caused by Crown Capital and/or its employees’ misconduct then the answer is, YES, you can sue Crown Capital 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 Crown Capital in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Crown Capital is to call Attorney Pearce at our office at 800-732-2889.
What is Crown Capital Securities, L.P.?
Crown Capital (CRD# 6312) predecessor was first formed 1972 as an SEC and FINRA registered broker-dealer. Since then there have been several name changes and restructuring of the company. The current Crown Capital iteration began operations in 1999 and is headquartered in Orange, California. 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 200 Crown Capital branch offices with over 400 registered representatives in every state.
Crown Capital Securities, L.P. Has Many Different Regulatory Problems
Crown Capital rapid growth has not been without consequences. There have been approximately 6 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 Crown Capital 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. Crown Capital is a repeat offender: there are 2 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 CROWN CAPITAL SECURITIES HAS FACED OVER THE YEARS*
Crown Capital has been repeatedly censured, warned, and fined over $1.5 million 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:
SEC Sanctions Crown Capital For Mutual Fund Sales Abuses
The SEC investigated and found multiple breaches of fiduciary duty by Crown Capital, a dually-registered investment adviser and broker-dealer, in connection with its receipt of third-party compensation from client investments without fully and fairly disclosing its conflicts of interest. Specifically, the SEC found Crown Capital invested clients in: (1) mutual fund share classes that paid Crown Capital and its investment advisory representatives (“IARs,” who were also registered representatives) fees pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”); (2) certain mutual funds that also generated no-transaction fee (“NTF”) revenue for the firm; and (3) cash sweep products that likewise resulted in Crown Capital receiving revenue sharing. In spite of these financial arrangements, Crown provided no disclosure or inadequate disclosure of the multiple conflicts of interest arising from the firm’s receipt of this compensation.
Further, the SEC found that Crown Capital also failed to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder in connection with its mutual fund share class selection practices, cash sweep revenue sharing, and NTF revenue sharing. As a result of the conduct described above, the SEC concluded Crown Capital willfully violated Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 thereunder and ordered it to cease-and-desist from any further violations, censured the company, and ordered to pay over $1.5 million in disgorgement, prejudgment interest, and civil penalties for the violations.
SEC Sanctions Crown Capital For Mutual Fund Sales Abuse
FINRA investigated and found Crown Capital failed to establish and maintain a supervisory system, including written supervisory procedures, for reviewing and monitoring mutual fund switches reasonably designed to achieve compliance with FINRA suitability requirements and failed to reasonably supervise short-term switches of Class A mutual fund shares conducted by two firm registered representatives, and thus Crown Capital violated NASO Rule 3010(a), NASO Rule 3010(b), and FINRA Rule 2010. As a result, the company was censured and fined $75,000.
*Above are only some of the regulatory disciplinary actions filed against Crown Capital by FINRA. NASSA and other state securities regulator investigations and enforcement actions account for another 4 BrokerCheck disclosures.
Crown Capital Customer Complaints
There have been scores of customer complaints filed against Crown Capital stockbrokers and investment advisors over the years. We have launched many investigations of current and former Crown Capital advisors:
If you have lost money investing with any of these Capital Capital 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 Crown Capital 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.
Did Crown Capital Securities Advisor Misconduct Cause You Investment Losses?
When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the 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. Crown Capital 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 Crown Capital without representation with an attorney about their complaints and have their complaints denied.
Consult With An Attorney Who Recovers Investment Losses Caused By Crown Capital Securities Today!
The 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 Crown Capital 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.