Advisor Insight

These financial firms land on disciplinary action list

Sarah O'Brien, special to

A shuttering Atlanta brokerage firm has two more dings on its regulatory record.

J.P. Turner & Company, which has been part of Cetera Financial Group since 2014 — and is in the process of being absorbed into another Cetera-owned brokerage — recently consented to sanctions handed down by the Financial Industry Regulatory Authority, without admitting or denying guilt, in two separate actions.

The cases are included in Finra's monthly rundown of disciplinary actions it has taken against firms and individuals for alleged violations of federal securities laws, rules and regulations.

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In the first action involving Turner, Finra found that the firm violated a rule requiring brokers to ensure that all municipal securities transactions between the firm's account and a customer's account be done at a "fair and reasonable" price.

Finra also says the firm's supervisory system failed to "provide for supervision reasonably designed to achieve compliance" with securities regulations related to fair pricing of municipals.

Turner was censured by Finra, fined $140,000 and ordered to pay $76,743.68 plus interest in restitution to customers.

In the second recent case involving Turner, Finra says the brokerage failed to prevent registered reps from making multiple phone solicitations to numbers that were on both the national do-not-call registry and the firm's own list. Finra also found that Turner "failed to establish, maintain and enforce" a supervisory system that would prevent those phone calls from being made.

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According to Finra records, when Turner stopped using a third-party telemarketer company-wide, one of its offices was permitted to continue using the telemarketer. But because the marketing firm was no longer receiving a do-not-call list from Turner, calls were made to people on the registry.

Finra censured the firm and fined it $75,000.

These latest two sanctions add to the 30-plus regulatory events listed on Turner's BrokerCheck file.

Turner had roughly 300 brokers before Cetera announced last July that it would be closing Turner. According to published reports, about half of the Turner reps were offered positions with Summit Brokerage Services, the Cetera firm that is absorbing what's left of Turner.

Also, although Cetera's owner, RCS Capital, filed for prearranged Chapter 11 bankruptcy protection Jan. 31, the company said Cetera will be unaffected by the bankruptcy and will remain intact in the form of a privately held company.

Cetera did not respond to a request for comment.

Meanwhile, Finra also has been going after firms for infractions related to unit investment trusts. Basically, UITs are investments in a fixed portfolio of income-producing securities that have a defined maturity date.

In one case, Finra found that Woodbury Financial Services, of Oakdale, Minnesota, failed to identify and apply sales charge discounts to certain customers' eligible purchases of UITs. This resulted in customers paying excessive sales charges of about $98,937, according to Finra.

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The findings also said that Woodbury failed to establish, maintain and enforce a supervisory system and written supervisory procedures "reasonably designed to ensure that customers received sales charge discounts on all eligible UIT purchases."

Without admitting or denying Finra's findings, Woodbury consented to a censure and a $100,000 fine, along with paying restitution of $98,973.31 to affected customers.

Woodbury, with about 1,200 independent reps, is part of AIG Advisor Group, which is being sold by parent American International Group to Lightyear Capital and PSP Investments. The deal was announced late last month.

AIG did not respond to a call seeking comment on the Finra sanctions against Woodbury.

In a separate case, Finra disciplined another brokerage for similar violations involving UITs.

According to the regulator, ProEquities, of Birmingham, Alabama, lacked written supervisory procedures to identify UIT transactions eligible for sales charge discounts and "lacked a process to assure that such discounts were properly applied." Finra also says this resulted in excessive sales charges of $109,709.

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Without admitting or denying guilt, ProEquities consented to the sanctions of a censure, a $165,000 fine and an order to pay $109,709 in restitution to customers.

ProEquities, which is owned by Protective Life and has about 1,000 brokers across the country, has more than 50 regulatory events listed on its BrokerCheck report.

A representative of Protective declined to comment.

— By Sarah O'Brien, special to