Please call for a free consultation with an attorney if you suffered losses First Financial Equity Corp., particularly if you suffered losses in ETF or annuity investments.
First Financial Equity, a securities brokerage firm headquartered in Scottsdale, Arizona, as identified by FINRA in February 2017, entered in a regulatory settlement with FINRA regulators concerning allegations that financial advisers were receiving excessive commissions and selling unsuitable ETF investments and annuities. The suit also revealed that systemic problems existed in the supervising of the advisers that would prevent such violations.
A FFEC broker who typifies the problems at FFEC is John Schooler. This FFEC broker has 26 customer complaints. Such complaints generally evolve into arbitration lawsuits against the firm. The complaints against Schooler involve TIC, oil/gas and other inherently aggressive investments.
Under the terms of the Offer of Settlement with FINRA, the firm consented to, without
admitting or denying the same, the entry of the following findings. The findings
stated that First Financial Equity failed to establish, maintain, and enforce an adequate supervisory system, including written procedures, designed to ensure that the firm’s sales of leveraged and inverse ETFs (nontraditional ETFs) complied with applicable securities laws, and
NASD and FINRA rules.
The findings also stated that First Financial Equity failed to establish, maintain,
and enforce an adequate supervisory system and written procedures related to the sale
of multi-share class variable annuities and to maintain records supporting customer
suitability determinations with respect to variable annuity purchases.
Leveraged and inverse ETF are a high risk investment that pays advisers a high commission. This creates a problem in that it provides motivation for advisers to recommend such investments to investors not seeking high risk. Such suitability violations are in violation of FINRA rules in addition to the anti-fraud provision of federal and most state securities laws.
The firm failed to provide sufficient training to its registered representatives and principals on the sale and supervision of multi-share class variable annuities. The findings also included that the firm failed to implement a reasonable supervisory system and procedures to supervise variable annuity exchanges.