Money laundering concerns, litigation, unreported customer complaints… it sounds like something from the movie Wolf of Wall Street and the infamous Stratton Oakmont brokerage firm. Sadly, these are allegations levied against Oppenheimer & Co., an otherwise well respected Wall Street firm with over $1 billion in revenues and 3500 employees. Big, however, doesn’t mean better. The Financial Industry Regulatory Authority (FINRA) recently settled a wide variety of misconduct charges against Oppenheimer and imposed a $3.4 million penalty.
FINRA’s Prosecution of Oppenheimer & Co.
Oppenheimer & Co. is the brokerage arm of Oppenheimer Holdings. Based in New York City, the firm has been in business since 1945. Since at least 2002, the firm has been in trouble with regulators for not following reporting regulations.
Industry and SEC rules require that brokerage firms disclose any sanctions, formal complaints, arbitrations or regulatory proceedings against them. FINRA makes these records available to the public on its BrokerCheck system. The system offers an easy to search, free database available to the public. If you want to know if a particular firm has a clean record or a long history of problems, that information is now available with just a few mouse clicks.
Mandatory disclosures for individual stockbrokers are even more comprehensive. Registered reps must disclose criminal records, tax liens, bankruptcies and judgments in addition to the regulatory and complaint records applicable to brokerage firms.
In 2006, FINRA fined Oppenheimer $250,000 for not complying with reporting requirements. Nine years later the firm was fined $2.5 million for similar violations and also ordered to pay $1.250 million in restitution. In the latter case, the firm was also required to an independent consultant to insure compliance.
Apparently, those prior violations and fines weren’t enough.
This week Oppenheimer was ordered to pay $1.575 in fines and $1.850 in restitution.
The fines stem from an enforcement proceeding against the company that found the firm “failed to timely make 273 filings… Among the information Oppenheimer failed to timely disclose…were regulatory findings of securities violations, disciplinary actions… [taken against employees] and settlements of securities-related arbitration and litigation claims.” The company was also accused of not filing 92 copies of claims. When disclosures were made, they were an average of 4 years late.
In a few instances, the company also overcharged some clients.
Finally, the company didn’t disclose that its anti-money laundering compliance officer was under investigation by the SEC.
Self reporting is critical in the financial services industry. There are hundreds of thousands of stock brokers in the United States. Regulations require that the brokerage firms insure that all public disclosure files are up to date for both the firms and their employees. The industry relies heavily on trust and there can be no trust if the disclosure records are inaccurate.
Would you want to give your hard earned money to a broker with recent convictions for drug trafficking? If your investment advisor was an addict or broke and facing millions in judgments and tax liens, most people would want to know.
Perhaps the most concerning finding by FINRA concerned Oppenheimer’s refusal to turn over documents to individual claimants who were ripped off by a broker named Mark Horton. In March of last year, the firm was fined $3.8 million for failing to supervise Horton. Just over one year later we now know that the company was withholding information from claimants who were trying to recoup their losses. (Horton was sentenced to prison.)
By not providing documents in the Horton matter, the company was making it much harder for victims to recover their money.
Oppenheimer was allowed to pay the penalties without admitting any guilt or wrongdoing.
Can I Sue My Stockbroker?
We frequently hear from folks who lost their money to unscrupulous investment advisors and brokers. They want to know, “Can I sue my stockbroker?” If the person responsible for the loss worked for a brokerage company, those claims are usually heard by binding arbitration before a FINRA panel.
Although victims of stockbroker misconduct can’t sue in most instances, they can arbitrate and those arbitrations are usually quick (14 months or less).
The investment fraud recovery lawyers at MahanyLaw will pursues claims against banks, brokerage firms and other professionals. Most cases are accepted on a contingent or “success” fee basis meaning you don’t pay us anything unless we are recovery money for you.
For more information, contact the lawyers at MahanyLaw today. Consultations are free and confidential. Minimum loss size is $200,000. The author of this post, attorney Brian Mahany, can be reached at or by telephone at (direct).
MahanyLaw – America’s Fraud Recovery Lawyers