Park Avenue Securities LLC (“Park Avenue Securities”) (CRD# 46173) 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 Park Avenue Securities, 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 Park Avenue Securities, 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 Park Avenue Securities LLC?
If you’ve lost money caused by Park Avenue Securities and/or its employees’ misconduct then the answer is, YES, you can sue Park Avenue Securities 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 Park Avenue Securities in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Park Avenue Securities is to call Attorney Pearce at our office at 800-732-2889.
What is Park Avenue Securities LLC?
Park Avenue Securities (CRD# 46173) has been registered with the SEC and FINRA since 1999. The broker-dealer is headquartered in New York City, New York with branch offices 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 400 Park Avenue Securities branch offices with over 2600 registered representatives in every state. It is now one of the 50 largest independent broker-dealer and investment advisory firms in the United States.
Park Avenue Securities LLC Has Many Different Regulatory Problems
Park Avenue Securities’ rapid growth has not been without consequences. There have been approximately 17 Federal, state and self-regulatory body disclosure events; that is, pending or final 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 Park Avenue Securities 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. Park Avenue Securities is a repeat offender: there are over 8 FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS PARK AVENUE SECURITIES HAS FACED OVER THE YEARS*
Park Avenue Securities 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:
FINRA Sanctions Park Avenue Securities For Mutual Fund Sales Abuses
FINRA investigated Park Avenue Securities and discovered that it 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, Park Avenue Securities 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, FINRA concluded Park Avenue Securities violated NASD Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010 and imposed a censure upon the brokerage and ordered it to provide a remediation to Eligible Customers and make restitution.
FINRA Sanctions Park Avenue Securities For Variable Annuity Sales Abuses
FINRA also investigated Park Avenue Securities and its variable annuity sales practices. In the course of that investigation, FINRA found that Park Avenue Securities failed to establish, maintain and enforce a supervisory system and written supervisory procedures reasonably designed to ensure that representatives’ recommendations concerning multi-share class variable annuities complied with applicable securities law, regulations and rules. FINRA concluded that Park Avenue Securities violated NASD Rule 3010 and FINRA Rules 2330, 3110 and 2010 and censured and fined the firm $300,000.
FINRA Sanctions Park Avenue Securities For Supervisory Lapses
In the course of one of FINRA’s audits of Park Avenue Securities, it found that the brokerage firm failed to enforce its written supervisory procedures regarding the monitoring of customer trades, and failed to establish and maintain a supervisory system reasonably designed to follow up on the performance of its supervisors with regard to monitoring trade executions, in violation of NASD Rules 3010(a), 3010(b) and FINRA Rule 2010. Further, that Park Avenue Securities also failed to establish, maintain and enforce a supervisory system reasonably designed to review and monitor the transmittal of funds from the accounts of its customers to third party accounts and outside entities, in violation of NASD Rules 3010, 3012(a)(2)(B)(D and FINRA Rule 2010. As a result of these deficiencies, FINRA discovered Park Avenue Securities failed to detect the unauthorized sales of securities and the wiring of funds by a Park Avenue Securities unregistered administrative assistant who misappropriated approximately $255,300 from the Park Avenue Securities accounts of two elderly customers over a period of more than three years. FINRA imposed a censure and fine of $195,000 for those supervisory lapses.
FINRA Sanctions Park Avenue Securities For UIT Sales Abuses
During the course of another FINRA investigation, the regulator discovered that Park Avenue Securities failed to apply sales charge discounts to certain customers’ eligible purchases of unit investment trusts (“UITs”) in violation of FINRA Rule 2010. In addition, Park Avenue Securities failed to establish, maintain and enforce a supervisory system and written supervisory procedures (“WSPs”) reasonably designed to ensure that customers received sales charge discounts on all eligible UIT purchases in violation of NASD Conduct Rule 3010 and FINRA Rule 2010. The regulator censured the broker-dealer, fined it $300,000, and ordered it to make restitution to the affected customers in the total amount of over $443,000 for those UIT sales abuses.
FINRA Sanctions Park Avenue Securities For Supervisory Failures
This FINRA sanction arose out of a Long Island, following the collapse of a NY based Ponzi scheme involving Agape World, Inc. and Agape Merchant Advance, LLC (referred to collectively as “Agape”) and a federal criminal investigation. At some point, Park Avenue Securities became aware that at least two of its registered representatives engaged in unapproved private securities transactions involving Agape. During Park Avenue Securities’ investigation of the two employees, it learned from them that other registered representatives “knew about [their] contacts with Agape.” Among those identified was one of their three insurance supervisors (the “general agent”). In addition, counsel for the two employees alleged in an email to the vice president in the firm’s compliance department that a member of the firm’s “supervisory staff had suggested that the two employees destroy documents and files, and “include certain information in their statements [to the firm in connection with its internal investigation], and omit other information.” FINRA concluded that Park Avenue Securities conducted an inadequate investigation of its representatives’ involvement with Agape and of the allegations made by the two employees. Among other things, Park Avenue Securities allowed the general agent to be involved in the investigation. The firm’s failure to conduct an adequate investigation violated NASD Rule 3010 and FINRA Rule 2010. Separately, Park Avenue Securities failed to establish an adequate supervisory system for review of electronic communications, in violation of NASD Rules 3010 and 2110 and FINRA Rule 2010. For these supervisory failures, FINRA censured the broker-dealer, and fined it $175,000.
FINRA Sanctions Park Avenue Securities For Not Enforcing Its Supervisory Procedures
This FINRA investigation revealed Park Avenue Securities failure to enforce its existing supervisory procedures into areas. The broker-dealer had previously been was censured and fined for violating NASD Rules 3010 and 2110 for failing to adequately enforce written supervisory procedures regarding completion and accuracy of Form U4 and amendments thereto. Subsequent to that sanction, FINRA conducted another investigation and for the short period it reviewed firm’s books and records, FINRA found that Park Avenue Securities continued to fail to enforce its written supervisory procedures regarding amendments to FINRA’s disclosure reporting forms. FINRA also found that Park Avenue Securities failed to enforce its written supervisory procedures related to its direct mutual fund and 529 Plan business when switches were made among mutual fund accounts and 529 Plan accounts.
For those failures, FINRA censured and fined Park Avenue Securities once again. This time, FINRA increased the fine from $9000 to $25,000. Perhaps, if FINRA imposed a meaningful fine, the firm might not have looked the other way when it came to enforcing its own supervisory procedures.
SEC Sanctions Park Avenue Securities For Mutual Fund Sales Abuses
The SEC pursuant to the Division of Enforcement’s (the “Division”) Share Class Selection Disclosure Initiative (“SCSD Initiative”) accepted a settlement offer for Park Avenue Securities violations of the Investment Advisors Act of 1940. The settlement arose out of Park Avenue Securities breaches of fiduciary duty and inadequate disclosures by the investment advisory firm in connection with its mutual fund share class selection practices and the fees it received pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”). During the relevant period, Park Avenue Securities financial advisor’s 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. The broker-dealer and investment advisory firm received 12b-1 fees in connection with these investments. Park Avenue Securities also received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes. Park Avenue Securities was required but failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. The SEC Ordered Park Avenue Securities to cease-and-desist from those violations, censured the investment advisory firm and ordered it to pay over one half million dollars in disgorgement and prejudgment interest to the affected investors.
*Above are only some of the regulatory disciplinary actions filed against Park Avenue Securities by FINRA. NASSA and other state securities regulator investigations and enforcement actions account for another 40 more BrokerCheck disclosures.
Park Avenue Securities Customer Complaints
There have been scores of customer complaints filed against Park Avenue Securities stockbrokers and investment advisors over the years. We have launched many investigations of current and former Park Avenue Securities advisors:
If you have lost money investing with any of these Park Avenue Securities 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 Park Avenue 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 Park Avenue 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 right to seek reimbursement from the responsible parties. Park Avenue Securities 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 Park Avenue Securities without representation with an attorney about their complaints and have their complaints denied.
Consult With An Attorney Who Recovers Investment Losses Caused By Park Avenue Securities LLC 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 Park Avenue Securities 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.