Founders Financial Securities LLC (“Founders Financial”) (CRD# 137945) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors. At the Law Offices of Robert Wayne Pearce, we have investigated Founders Financial, 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 Founders Financial, 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 Founders Financial Securities LLC?
If you’ve lost money caused by Founders Financial and/or its employees’ misconduct then the answer is, YES, you can sue Founders Financial 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 Founders Financial in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Founders Financial is to call Attorney Pearce at our office at 800-732-2889.
What is Founders Financial Securities LLC?
Founders Financial (CRD# 137945) has been registered with the SEC and FINRA as a broker dealer since 2006. The company is controlled by the Founders Financial, Inc. and headquartered in Towson, Maryland 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 90 registered representatives in every state. It is now one of the 50 largest independent broker-dealer and investment advisory firms in the United States.
A BRIEF OVERVIEW OF REGULATORY PROBLEMS FOUNDERS FINANCIAL SECURITIES LLC HAS FACED
SEC Ordered Founders Financial To Pay $1.6 Million
Founders Financial has been censured, ordered to pay investors, and fined over $1.6 million for its own misconduct and failure to supervise its army of financial advisors for multiple breaches of fiduciary duty and inadequate disclosures by Founders Financial, a dually-registered investment adviser and broker-dealer, in connection with its mutual fund share class selection practices and the fees it and its associated persons received or benefited from pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”).
The SEC found that at times during the relevant period, Founders Financial purchased, recommended or held for advisory clients mutual fund share classes that charged 12b-1 fees instead of lower-cost share classes of the same funds for which the clients were eligible. Founders Financial and its associated persons received or benefited from 12b-1 fees in connection with these investments but failed to adequately disclose the conflicts of interest related to its receipt of 12b-1 fees and its selection of mutual fund share classes that pay such fees. In addition, the SEC discovered Founders Financial breached its duty to seek best execution for its clients by investing them in mutual fund share classes with 12b-1 fees rather than available lower-cost share classes of the same funds. During the relevant period, the SEC uncovered the fact that Founders Financial and its associated persons received, or benefited from, over $1.24 million in 12b-1 fees for advising clients to invest in or hold such mutual fund share classes. The SEC ordered Founders Financial to cease and desist from committing or causing any violations and any future violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 promulgated thereunder, censured the investment adviser, and ordered it to pay, disgorgement with prejudgment interest to affected investors in an amount just under $1.5 million, and ordered it to pay a civil monetary penalty to the SEC in the amount of $140,000.
*Above is only one of the public regulatory disciplinary actions filed against Founders Financial by FINRA. There is at least one more FINRA investigation and enforcement action reported on BrokerCheck as a regulatory disciplinary proceeding disclosure.
Founders Financial Securities Customer Complaints
There have been many complaints filed against Founders Financial stockbrokers and investment advisors over the years. We have launched a number of investigations of current and former Founders Financial advisors.
If you have lost money investing with a Founders Financial Securities 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 Founders Financial Securities LLC 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 Founders Financial Securities LLC 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. Founders Financial 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 Founders Financial 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 Founders Financial Securities LLC Today!
The securities lawyers 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 Founders Financial 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.