If you are or were an investor with First Standard Financial and believe First Standard churned your account, please call 303-300-5022. Initial consultations are free and confidential.
A supervisor with First Standard Financial has recently been suspended for two months and fined for failing to supervise churning activities First Standard Financial brokers. The regulator instituting this stipulated sanction is the Financial Industry Regulatory Authority (FINRA). FINRA regulates securities brokerage firms under the oversight of the SEC.
Between March 2018 and May 2019, the supervisor at First Standard failed to reasonably supervise a former First Standard broker who had, with a history of violations and was required to given heightened supervision, excessively and unsuitably traded the accounts of three investors. Excessive trades are commonly referred to as “churning.”
FINRA rules prohibit excessive trading in an investor’s account. To guard against this, FINRA rules require a brokerage to “establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules.” To comply with this FINRA rule, a firm’s supervisors must reasonably investigate “red flags,” or warning signals, of potential broker misconduct and take appropriate action when misconduct has occurred. First Standard Financial failed to institute such safeguards.
Not only did the broker have a history that should have required heightened supervision, the supervisor who was charged with monitoring the broker also had a history. An arbitration panel in 2016 found that this supervisor had committed violations himself while acting as a broker. These violations included churning.
This same supervisor also has a history of being associated with a number of brokerages that been expelled by regulators. These facts make the systematic failure to supervise churning at First Standard foreseeable.