Lincoln Investment (“Lincoln”) (CRD# 519) 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 Lincoln Investment, 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 Lincoln Investment, you should strongly consider hiring a securities 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 Lincoln Investment?
If you’ve lost money caused by Lincoln investment and/or its employees’ misconduct then the answer is, YES, you can sue Lincoln Investment 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 Lincoln Investment in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Lincoln Investment is to call Attorney Pearce at our office at 800-732-2889.
What is Lincoln Investment?
Lincoln Investment (CRD# 519) has been registered with the SEC and FINRA as a securities broker-dealer since 1969. The company is controlled by the Lincoln Investment Group Inc. and headquartered in Fort Washington, Pennsylvania. 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 400 Lincoln Investment branch offices with over 1400 registered representatives in every state. It is now one of the 50 largest independent broker-dealer and investment advisory firms in the United States.
Lincoln Investment Has Many Different Regulatory Problems
Lincoln Investment’s 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 Lincoln Investment 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. Lincoln Investment is a repeat offender: there are over 6 FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS LINCOLN INVESTMENT HAS FACED OVER THE YEARS*
Lincoln Investment 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 Sanctioned Lincoln Investment For Failing To Protect Customers Assets
FINRA investigated and discovered that Lincoln Investment’s supervisory system and written supervisory procedures (WSPs) were not reasonably designed to achieve compliance with the firm’s obligation to monitor transmittals of customer funds, and, as a result, in the fall of 2017, impostors stole or attempted to steal customer funds by requesting transfers from the accounts of two Lincoln customers. By virtue of the foregoing, Lincoln Investment violated FINRA Rules 3110 and 2010 and FINRA imposed a censure and a fine of $35,000.
FINRA Sanctioned Lincoln Investment For Not Monitoring Variable Annuity Sales Abuse
Lincoln Investment sold a significant amount of variable annuities during the relevant period. In 2017, for example, approximately 20 percent of the Firm’s revenue came from variable annuity sales.
Variable annuities are contracts between an investor and an issuing company, whereby an issuing company promises to make periodic payments to the investor or a beneficiary designated by the investor. Variable annuities allow customers to choose from an array of contract features. For example, variable annuities may offer various types of optional riders, and can subject investors to a variety of fees or charges, including surrender charges, which investors may owe if they withdraw money from the annuity before a specified period.
During a routine examination of Lincoln Investment in 2017, FINRA staff determined that Lincoln Investment failed to implement reasonably designed surveillance procedures to monitor its registered representatives’ rates of effecting variable annuity exchanges. Specifically, FINRA staff discovered that the Lincoln Investment only tracked exchanges where Lincoln Investment was the broker of record for the variable annuity that was being exchanged, or so-called “Lincoln-to-Lincoln” exchanges. In so doing, Lincoln Investment did not track variable annuity exchanges where Lincoln Investment was not the broker of record for the variable annuity that was being exchanged, or so-called “non-Lincoln-to-Lincoln” exchanges. During the relevant period, more than half of the approximately 2,800 variable annuity exchanges effected by the Lincoln Investment’s representatives were “non-Lincoln-to-Lincoln” exchanges and, thus, excluded from Lincoln Investments surveillance report.
As a result of its investigation, FINRA concluded that Lincoln Investment failed to implement reasonably-designed surveillance procedures to monitor its registered representatives’ rates of effecting variable annuity exchanges, in violation of FINRA Rules 2330(d), 3110, and 2010 and imposed a censure and a $35,000 fine upon the firm.
FINRA Sanctioned Lincoln Investment For Cheating Customers Out Of Sales Charge Waivers
FINRA investigated and discovered during the relevant period that Lincoln Investment disadvantaged certain retirement plan and charitable organization customers who 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, Lincoln Investment failed to establish and maintain a supervisory system and written supervisory procedures reasonably designed to ensure that Eligible Customers who purchased mutual fund shares received the benefit of applicable sales charge waivers.
As a result, Lincoln Investment violated NASD Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010. As a result of this misconduct, FINRA imposed a censure and ordered Lincoln Investment to conduct the remediation and make restitution to the customers cheated out of the sales charge waivers and/or charged higher backend sales charges and higher ongoing fees and expenses in other classes of mutual funds.
FINRA Sanctioned Lincoln Investment For Not Reviewing Reports Produced By Its Advisors
During an audit of Lincoln Investment FINRA discovered that the brokerage firm failed to enforce a supervisory system and written supervisory procedures reasonably designed to ensure an effective review of consolidated reports produced by registered representatives and provided to customers. As a result, Lincoln Investment violated NASD Conduct Rule 3010 and FINRA Rule 2010 and censured the firm and fined it $75,000.
FINRA Sanctioned Lincoln Investment For Mutual Fund Sales Abuse
Some mutual fund companies sell shares that charge front-end loads. These mutual fund companies typically offer discounts at certain pre-determined levels of investments, which are called “breakpoints.” These discounts are commonly referred to as “breakpoint discounts.”
FINRA required certain member firms that sold front-end load mutual funds to conduct a self-assessment of breakpoint compliance (the “Self-Assessment”)- FINRA provided the firms with instructions and interpretative guidance on how to complete the Self-Assessment, report the results, and make refunds to customers who were denied “breakpoint discounts.”
FINRA required Lincoln Investment to provide refunds expeditiously in those cases where it was aware that customers had not received the appropriate breakpoint discount In its review of Lincoln Investment’s refunds, FINRA found that the firm failed to provide timely refunds in 398 of 423 instances.
By reason of the aforementioned conduct, Lincoln Investment violated NASD Conduct Rule 2110, and was censured and fined $15,000.
*Above are only some of the regulatory disciplinary actions filed against Lincoln Investment by FINRA. There are at least two more SEC, FINRA, NASSA and/or other state securities regulator investigations and enforcement actions on BrokerCheck as regulatory disciplinary proceeding disclosures.
Lincoln Investment Customer Complaints
There have been scores of customer complaints filed against Lincoln Investment stockbrokers and investment advisors over the years. We have launched many investigations of current and former Lincoln Investment advisors:
- Louis Olave of Lincoln Investment
- Albert Kim of Vanguard Marketing Corporation
- Matthew Korsmo of Lincoln Investment
- Shashi Mehrotra of Lincoln Investment
- Lester Burroughs formerly with Lincoln Investment
- Thomas Baker of Lincoln Investment
- Thomas Donahue of Lincoln Financial Securities Corporation
- Alexis Cain of Lincoln Investment
If you have lost money investing with any of these Lincoln Investment 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 Lincoln Investment 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 Lincoln Investment 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. Lincoln Investment 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 Lincoln Investment 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 Lincoln Investment 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 Lincoln Investment 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.