Principal Securities Inc. (“Principal Securities”) (CRD# 1137) 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 Principal 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’ve suffered investment losses at Principal Securities due to broker misconduct, fraud, or negligence, you have legal options to recover your money. The firm’s documented history of supervisory failures and regulatory violations may be directly connected to the losses in your account. Most investors pursue claims through FINRA arbitration proceedings rather than court litigation, as arbitration agreements are standard in brokerage account contracts.
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 to evaluate your case and determine if you have viable claims against Principal Securities for investment fraud, unsuitable recommendations, churning, failure to supervise, or other violations. Let’s discuss your situation and explore how we can help you seek the compensation you deserve.
Can I Sue Principal Securities?
Yes, you can sue Principal Securities if you’ve lost money caused by the firm and/or its employees’ misconduct, 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 45 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Principal Securities in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Principal Securities is to call Attorney Pearce at our office.
How to Sue Principal Securities for Investment Losses
What Can I Do If I Lost Money at Principal Securities?
If you lost money at Principal Securities, you can file a claim through FINRA arbitration to recover your investment losses. FINRA arbitration is the securities industry’s alternative dispute resolution forum where most investor-broker disputes are resolved, because most brokerage account agreements include mandatory arbitration clauses that waive your right to sue in court. This process allows individual investors to pursue claims against major firms like Principal Securities without the expense and complexity of traditional litigation.
The key to a successful claim is connecting your losses to specific misconduct by Principal Securities or its registered representatives. Based on the firm’s regulatory history, common grounds for claims include failure to supervise, unsuitable investment recommendations, churning and excessive trading, unauthorized transactions, misrepresentation of risks, and sales charge violations. The SEC and FINRA have repeatedly sanctioned Principal Securities for supervisory lapses, mutual fund abuse, variable annuity sales violations, and inadequate compliance systems—violations that directly impact investor accounts.
Principal Securities’ independent broker-dealer business model creates heightened supervision risks, as FINRA has documented in multiple enforcement actions. The firm’s reliance on remote supervision through Offices of Supervisory Jurisdiction (OSJs) has resulted in inadequate oversight of registered representatives’ daily activities, leading to investor harm. If your account experienced unusual losses, inappropriate product recommendations, or unexplained fees during the periods when Principal Securities faced regulatory sanctions, these circumstances may support your claim.
Who Can Help Me Sue Principal Securities?
Who can help you sue Principal Securities? An experienced securities arbitration attorney who specializes in FINRA proceedings and has a proven track record of recovering investment losses can represent you effectively against Principal Securities. The Law Offices of Robert Wayne Pearce has handled hundreds of FINRA arbitration cases against independent broker-dealers and understands the specific supervisory failures that characterize firms like Principal Securities. Our firm has investigated the regulatory violations and customer complaints against this organization extensively and knows how to build compelling cases connecting firm-level compliance failures to individual investor losses.
The arbitration process requires strategic presentation of evidence, expert testimony regarding industry standards, and thorough knowledge of securities regulations. Having an attorney who can navigate FINRA’s procedural rules, develop persuasive arguments about breach of fiduciary duty and negligence, and effectively cross-examine opposing witnesses significantly increases your chances of recovery. Many investors make the mistake of contacting Principal Securities directly about their complaints without legal representation, only to have their concerns dismissed or inadequately addressed.
What is Principal Securities Inc.?
Principal Securities (CRD# 1137) has been registered with the SEC and FINRA as a broker-dealer since 1968 and with the SEC as an investment adviser since 1997. The company is controlled by Principal Financial Services, Inc. and affiliated with Principal National Life Insurance Company. Principal Securities is headquartered in Des Moines, Iowa with branch offices throughout the United States with financial advisors duly registered as securities and insurance salespersons.
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 900 Principal Securities branch offices with over 4000 registered representatives in every state. It is now one of the 50 largest independent broker-dealer and investment advisory firms in the United States.
Why Does Principal Securities Have So Many Bad Reviews and Customer Complaints?
Principal Securities has accumulated numerous customer complaints and bad reviews primarily because of its independent broker-dealer business model, which creates systemic supervision problems. Unlike traditional full-service brokerage firms with on-site managers and compliance staff, Principal Securities operates through a franchise-style network of small offices supervised remotely. This structure prioritizes growth and revenue over investor protection, as the firm expands through hundreds of one- and two-person offices without adequate daily oversight.
The firm’s registered representatives operate as separate businesses rather than employees, which means they control their own operations with minimal direct supervision. Principal Securities relies on other independent contractors running Offices of Supervisory Jurisdiction (OSJs) to monitor these scattered offices from remote locations. These OSJ managers typically run their own businesses simultaneously and cannot provide full-time, hands-on supervision of day-to-day broker activities. This creates dangerous gaps in oversight where unsuitable sales, misrepresentations, and unauthorized transactions can occur without detection.
Because there’s no immediate review of new accounts, securities transactions, or client correspondence at most Principal Securities offices, investors become vulnerable to sales abuse. Problems like forged signatures, inaccurate suitability information, and misleading sales materials often go undetected until significant losses occur. Many offices receive only one compliance audit visit per year, leaving months of activity unreviewed. The North American Securities Administrators Association (NASAA) has documented higher instances of sales abuse and investor losses at independent broker-dealers compared to traditional firms with on-site supervision, which explains why Principal Securities continues to generate customer complaints despite regulatory sanctions.
Principal Securities Inc. Has Many Different Regulatory Problems
Principal Securities’ growth has not been without consequences. There have been approximately 8 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 hundreds of customer complaints filed against Principal 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. Principal Securities is a repeat offender: there are at least 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 PRINCIPAL SECURITIES HAS FACED OVER THE YEARS
Principal Securities has been repeatedly censured, warned, and fined millions for its own misconduct and failure to supervise its army of financial advisors. A few of the notable SEC and FINRA sanctions for its supervisory failures are below:
SEC Orders Principal Securities To Pay Investors Over $1.7 million For Mutual Fund Sales Abuse
The SEC initiated administrative proceedings for breaches of fiduciary duty and inadequate disclosures by registered investment adviser Principal Securities in connection with its mutual fund share class selection practices and the fees it and associated persons received pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”). During the relevant period, it discovered that Principal Securities advisors purchased, recommended, or the firm 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. Principal Securities and its associated persons received 12b-1 fees in connection with these investments. Principal 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, Principal 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 Principal 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 brokerage firm and ordered it to pay disgorgement and prejudgment interest to affected investors, totaling $1,764,624.26.
FINRA Sanctions Principal Securities For Variable Annuity Sales Abuse
FINRA investigated and determined that for at least three years, the Principal Securities system for supervising additions to existing variable annuities was not reasonably designed to ensure that they complied with applicable securities laws and rules, including those governing suitability – a problem that affected more than 4,000 transactions. As a result, FINRA concluded that Principal Securities violated NASD Rule 3010 and FINRA Rules 2010 and 3110, censured the brokerage firm and fined it $250,000.
FINRA Sanctions Principal Securities For Supervisory Lapses
FINRA investigated Principal Securities and determined that it failed to establish, maintain, and enforce a reasonable supervisory system related to the use of consolidated reports provided to customers by its registered representatives. During the relevant period, the Principal Securities provided four consolidated reporting systems for its registered representatives to enter customized values for assets and accounts held away from the Firm into a consolidated report (“manual entries”): Principal Securities however, did not have an adequate supervisory system to review the reports provided to customers. Through this conduct, Principal Securities violated NASD Rule 3010, and FINRA Rules 3110 and 2010.
Additionally, during the same period, FINRA discovered that Principal Securities failed to enforce its written supervisory procedures, which required registered representatives to retain all customer correspondence, as well as records related to business transactions and other broker/dealer activities for customers. As a result of this conduct, FINRA concluded that Principal Securities violated Section 17 of the Securities Exchange Act of 1934 and Rule 1 7a-4 thereunder, NASD Rule 3010, and FINRA Rules 3110, 4511, and 2010.
For this widespread misconduct, FINRA only imposed a suspension and $175,000 fine.
FINRA Sanctions Principal Securities For Cheating Customers Out Of Sales Charge Waivers
FINRA investigated Principal Securities to determine whether it disadvantaged 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”). It found that 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, Principal Securities, then known as Princor, 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, FINRA concluded that Principal Securities violated NASD Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010, censured and ordered the brokerage firm to conduct the remediation and make restitution to those customers cheated out of sales charge waivers and charged higher expenses by being invested in the wrong share of mutual funds sold to them by Principal Securities financial advisors.
FINRA Sanctioned Principal Securities for Email Monitoring System
During an annual audit conducted by FINRA of Principal Securities, formerly known as Princor, the regulator determined that the brokerage firm failed to timely review approximately 2.7 million incoming email communications for approximately 2,100 email accounts due to a coding error in Princor’s email monitoring system. In addition, Princor failed to adequately monitor and test its technology infrastructure to determine that emails were properly routed to Princor’s email monitoring system. As such, Princor violated NASD Rule 3010 and FINRA Rule 2010 for which it was censured and fined $115,000.
*Above are only some of the regulatory disciplinary actions filed against Principal Securities by FINRA. There are at least three more SEC, FINRA, NASSA and/or other state securities regulator investigations and enforcement actions reported on BrokerCheck regulatory disciplinary proceeding disclosures.
Did Principal 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. Principal 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 Principal 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 Principal Securities Today
The securities lawyers at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 45 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Principal 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.
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