FSC Securities Corporation (CRD#: 7461) 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 a wide variety of FSC Securities Corporation 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 FSC Securities Corporation, 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 866-660-6508. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.
Can I Sue FSC Securities Corporation?
If you’ve lost money caused by FSC Securities Corporation and/or its employees’ misconduct then the answer is, YES, you can sue FSC Securities Corporation 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 FSC Securities Corporation in FINRA arbitration proceedings, but WIN that arbitration.
What is FSC Securities Corporation?
The formation of FSC Securities Corporation was in 1957. The company is controlled by the Advisor Group, Inc. and headquartered in Atlanta, Georgia. 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 600 branch offices with over 1400 registered representatives in every state. It is now affiliated with one of the largest broker-dealer and investment advisory firm organizations in the United States.
FSC Securities Corporation has Many Different Regulatory Problems
FSC Securities Corporation rapid growth has not been without consequences. There have been approximately 28 Federal, state and self-regulatory body disclosure events; that is, 28 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 FSC Securities Corporation 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. FSC Securities Corporation is a repeat offender: there are over 28 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 FSC SECURITIES CORPORATION HAS FACED OVER THE YEARS*
FSC Securities Corporation has been repeatedly censured, warned, and fined thousands of dollars for its own misconduct and failure to supervise its army of financial advisors. A few of the notable FINRA disciplinary proceedings sanctioning FSC Securities Corporation for its supervisory failures are below:
FSC Securities Corporation Censured And Fined For FINRA Rule Violations Related To Its Failure To Identify And Apply Available Sales Charge Waivers To Customers
FINRA found that during the relevant period FSC Securities Corporation cheated certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge (Eligible Customers”). These Eligible Customers were instead sold Class A shares with a front-end sales charge or Class B or C shares with back-end sales charges and higher ongoing fees and expenses. During this period, FSC failed to establish and maintain a supervisory system and procedures reasonably designed to ensure that Eligible Customers who purchased mutual fund shares received the benefit of applicable sales charge waivers. As a result, FSC violated NASD Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010. In addition to the Censure and Fine, the firm was ordered to submit a detailed plan to remediate Eligible Customers and compensate them for the damages they suffered related to the applicable mutual fund sales charge waivers that they were entitled to when they purchased shares in the funds.
FSC Securities Corporation Censured And Fined For FINRA Rule Violations Related To Multi-Share Class Variable Annuities Sales
FSC Securities Corporation failed to establish, maintain and enforce a supervisory system and written procedures designed to reasonably supervise representatives’ sale of multi-share class variable annuities and failed to provide training to their representatives and principals on the sale and supervision of multi-share class variable annuities. For example, the Firms’ procedures did not specifically address the suitability issues related to the different surrender periods, fees and costs of the different variable annuity share classes. Similarly, the Firm’s procedures did not specifically address the suitability concerns raised by the sale of an L-share contract when combined with a long-term income rider or to a customer with a long-term investment time horizon. As a result, the FSC Securities Corporation violated FINRA Rules 2330(d) and (e), F1NRA Rule 3110, and FINRA Rule 2010.
FSC Securities Corporation Censured And Fined For FINRA Rule Violations Related To Third Party Distributions From Customer Accounts
During the relevant period, a registered representative associated with FSC Securities Corporation sold memberships in PFG LLC (the “PFG fund”), an investment fund created by a former FSC Securities Corporation representative. In connection with his sale of the PFG fund memberships the registered representative submitted to FSC Securities Corporation, letters of authorization signed by 15 customers to transfer over $1.6 million from their brokerage accounts to a bank account controlled by the PFG fund. The PFG fund ultimately lost millions of dollars through speculative trading and other investments which the manager covered up by creating false account statements that fraudulently reflected fictitious assets and investment returns.
FINRA found that during the relevant period, FSC Securities Corporation failed to establish and maintain reasonable supervisory controls and procedures to monitor customers’ accounts with respect to patterns involving multiple transmittals of funds from customers’ accounts to the same third-party payee and to supervise these outside investments. As a result, FINRA found that FSC Securities Corporation violated NASD Conduct Rules 3010 and 3012 and FINRA Rule 2010.
FSC Securities Corporation Censured And Fined For FINRA Rule Violations Related To Non-Traditional ETFs
During the relevant period, FSC Securities Corporation offered and sold thousands of leveraged, or inverse, or both inverse and leveraged Exchange-Traded Funds (collectively, “Non-Traditional ETFs”) in approximately 1,400 retail customer accounts. Those purchases were worth approximately $92 million and generated approximately $603,000 in commissions.
FINRA sanctioned FSC Securities Corporation because it failed to establish and maintain a supervisory system, including written procedures, reasonably designed to ensure that the Firm’s offering of Non-Traditional ETFs complied with NASD and FINRA rules. Non-Traditional ETFs have certain risks that are not associated with traditional ETFs or equities. The Firm’s general supervisory system was not sufficiently tailored to address the unique features and risks involved with these products. Based on the foregoing, FSC violated NASD Rule 3010(a) and (b) and FINRA Rule 2010.
Also, during the Relevant Period, FSC Securities Corporation, by and through its registered representatives, recommended Non-Traditional ETFs to customers without fully understanding the features and risks associated with those products. FSC allowed its registered representatives to make unsuitable recommendations of Non-Traditional EIFs to many customers with conservative and moderate investment objectives and risk tolerances, some of whom were elderly. Moreover, many of those customers held the investments over extended periods of time and sustained losses of $492,485. Based on the foregoing, FSC violated NASD Rule 2310 and FINRA Rules 2111 and 2010 and in addition to the Censure and fine, was ordered to pay that amount in restitution to the customers.
FSC Securities Corporation Censured And Fined For Mutual Fund Breakpoint Violations
During the relevant period, FINRA issued Notice to Members 03-47, which, in providing guidance to firms on the capital treatment of breakpoint refunds issued through the Self-Assessment and Trade-by-Trade Review processes, informed firms that FINRA expected that refunds would be made to customers expeditiously. This matter grows out of a national examination that FINRA began conducting in 2005 (the Breakpoint Self-Assessment Follow-Up Review). The primary purpose of the Breakpoint Self-Assessment Follow-Up Review was to verify compliance with the instructions for the Self-Assessment and Trade-by-Trade Review and to assess whether firms timely and accurately completed remedial steps that FINRA required. The Breakpoint Self-Assessment Follow-Up Review also sampled firms’ efforts to assure that customers received breakpoint discounts on an ongoing basis.
The Breakpoint Self-Assessment Follow-Up Review conducted for FSC Securities Corporation found that the firm failed to accurately complete the Self-Assessment and failed to timely refund customers after the Self-Assessment, as discussed below. By reason of the foregoing, FSC Securities Corporation violated NASD Conduct Rule 2110.
*Above are only some of the regulatory disciplinary actions filed against FSC Securities Corporation by FINRA. NASSA and other state securities regulator investigations and enforcement actions account for another twenty-three BrokerCheck disclosures.
FSC Securities Corporation Customer Complaints
There have been scores of customer complaints filed against FSC Securities Corporation stockbrokers and investment advisors over the years. We have launched many investigations of current and former FSC Securities Corporation:
- Frank Briseno of FSC Securities Corporation
- Allen Mckell of FSC Securities
- James Shelby of FSC Securities Corporation
- Jason Shelby of FSC Securities Corporation
- John Sklencar Of FSC Securities
- Richard Peace of FSC Securities
- Brian Presley of FSC Securities
- Matthew Papadimatos of FSC Securities
- Louis Wargo of FSC Securities
- Jason Shelby of FSC Securities
If you have lost money investing with any of these FSC Securities Corporation 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 FSC Securities Corporation 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 FSC Securities Corporation 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. FSC Securities Corporation 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 FSC Securities Corporation without representation with an attorney about their complaints and have their complaints denied.
Consult With An Attorney Who Recovers Investment Losses Caused By FSC Securities Corporation 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 FSC Securities Corporation 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 866-660-6508. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.