PlanMember Securities Corporation (“PlanMember Securities”) (CRD# 11869) 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 PlanMember 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 PlanMember Securities, 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 PlanMember Securities Corporation?
If you’ve lost money caused by PlanMember Securities and/or its employees’ misconduct then the answer is, YES, you can sue PlanMember 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 PlanMember Securities in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against PlanMember Securities is to call Attorney Pearce at our office at 800-732-2889.
What is PlanMember Securities Corporation?
PlanMember Securities (CRD# 11869) has been registered with the SEC and FINRA as a broker dealer since 1980. The company is controlled by the PlanMember Financial Corporation and headquartered in Carpinteria, California 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 40 PlanMember Securities branch offices with over 90 registered representatives in every state.
PlanMember Securities Corporation Has Many Different Regulatory Problems
PlanMember Securities’ rapid growth has not been without consequences. There have been approximately 5 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 PlanMember 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. PlanMember Securities is a repeat offender: there are at least 4 FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS PLANMEMBER SECURITIES CORPORATION HAS FACED OVER THE YEARS*
PlanMember Securities has been repeatedly censured, warned, fined and ordered to pay investors millions of dollars 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 Orders PlanMember Securities To Pay Investors Over $3.5 Million
The SEC investigated PlanMember Securities and discovered multiple breaches of fiduciary duty and inadequate disclosures by registered investment adviser PlanMember Securities in connection with its mutual fund share class selection practices and the fees its associated persons received pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”). During the relevant period, PlanMember Securities 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. PlanMember Securities and its associated persons received 12b-1 fees in connection with these investments. PlanMember Securities 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. During the relevant period, PlanMember Securities and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes. As a result, the SEC ordered PlanMember Securities to cease and desist from committing or causing any violations and any future violations of Sections 206(2) and 207 of the Advisers Act; censured the investment adviser; and ordered it to pay disgorgement and prejudgment interest to affected investors, totaling $3,550,660.48.
FINRA Sanctions PlanMember Securities For Unfair Municipal Securities Prices
FINRA investigated PlanMember Securities and discovered the firm purchased municipal securities for its own account from a customer and/or sold municipal securities for its own account to a customer at an aggregate price (including any mark-down or mark-up) that was not fair and reasonable, taking into consideration all relevant factors, including the best judgment of the broker, dealer or municipal securities dealer as to the fair market value of the securities at the time of the transaction and of any securities exchanged or traded in connection with the transaction, the expense involved in effecting the transaction, the fact that the broker, dealer, or municipal securities dealer is entitled to a profit, and the total dollar amount of the transaction. FINRA found that the conduct described in this paragraph constitutes separate and distinct violations of MSRB Rules G-30 and G-17.
FINRA further found that PlanMember Securities supervisory system did not provide for supervision reasonably designed to achieve compliance with respect to the applicable securities laws and regulations, and the Rules of MSRB, concerning municipal securities fair pricing. At a minimum, adequate written supervisory procedures (“WSPs”) addressing municipal securities fair pricing should include the following:
(a) specific identification of the individual(s) responsible for supervision;
(b) the supervisory steps and reviews to be taken by the appropriate supervisor;
(c) the frequency of such reviews; and
(d) how such reviews shall be documented.
But PlanMember Securities’ WSPs did not provide for any of the four above-cited minimum requirements for adequate WSPs. The conduct described in this paragraph constitutes separate and distinct violations of MSRB Rule G-27.
As a result of PlanMember Securities violations of the foregoing MSRB Rules, FINRA censured PlanMember Securities and fined it $18,500.
FINRA Sanctions PlanMember Securities For Supervisory Lapses
During a FINRA audit, the auditors discovered multiple supervisory lapses. They found that PlanMember Securities failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (“WSPs”), reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable NASD and FINRA rules, with respect to four aspects of its business: (1) the review of variable annuity exchanges; (2) the review, approval, and retention of consolidated reports; (3) the review of email and customer correspondence; and (4) the review of its registered representatives’ business-related websites and social media.
As a result, FINRA concluded PlanMember Securities violated NASD Rule 3010, FINRA Rule 3110, FINRA Rule 2330(d)(1), NASD Rule 2210, FINRA Rule 2210, and FINRA Rule 2010, and issued a censure and a $90,000 fine against the brokerage firm.
FINRA Sanctions PlanMember Securities For Mutual Fund Abuse
In the course of a FINRA investigation, it discovered PlanMember Securities outsourced its breakpoint determinations to a third party vendor and that due to an error by PlanMember Securities’ vendor the broker-dealer failed to take certain B shares into consideration when determining the PlanMember Securities customers breakpoints. As a result, PlanMember Securities customers were overcharged thousands for their mutual fund purchases. FINRA found this occurred because PlanMember Securities did not have in place any system or procedures for supervising the vendor’s breakpoint determinations.
PlanMember Securities’ decision to outsource certain of its breakpoint determinations to a third party did not relieve PlanMember Securities of its ultimate responsibility for the outsourced activity. Accordingly, FINRA found that during the relevant period, PlanMember Securities failed to have in place adequate policies and procedures to monitor the outside vendor’s compliance with the terms of its agreement with the brokerage, and to assess the outside vendor’s continued fitness and ability to perform the outsourced activities. Thus, FINRA concluded failing to properly supervise its outside vendor to ensure that it was adequately carrying out the outsourced functions, PlanMember Securities violated NASD Rules 3010 and 2110, censured and fined the broker-dealer, $20,000.
*Above are only some of the regulatory disciplinary actions filed against PlanMember Securities by FINRA. There is at least one more SEC, FINRA, NASSA, and/or state securities regulator investigations and enforcement actions reported on BrokerCheck as regulatory disciplinary proceeding disclosures.
PlanMember Securities Customer Complaints
There have been hundreds of complaints filed against PlanMember Securities stockbrokers and investment advisors over the years. We have launched a number of investigations of current and former PlanMember Securities advisors, including:
If you have lost money investing with these PlanMember 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 PlanMember 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 PlanMember 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. PlanMember 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 PlanMember Securities 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 PlanMember Securities Corporation Today!
The securities 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 PlanMember 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.