FINRA’s Department of Enforcement recently investigated Barclays Capital and determined its supervisory systems and procedures for mutual funds were inadequate and contributed to several specific supervisory failures. FINRA cited the following supervisory deficiencies as evidence Barclays Capital’s supervisory and compliance functions were faulty, among other things:
Failed to provide adequate supervisory guidance for ensuring the suitability of mutual fund transactions,
- Incorrectly defined a mutual fund switch,
- Failed to identify unsuitable mutual fund transactions, including, but not limited to switches,
- Failed to notify customers of the costs associated with switches, and
- Failed to have a centralized system in place to aggregate or household mutual fund purchases to ensure customers received available mutual fund breakpoint discounts.
As a result of the aforementioned misconduct, FINRA alleges Barclays Capital engaged in multiple violations of federal securities laws and industry rules and regulations. Specifically, under NASD Rule 3010, a brokerage firm owes a duty to all of its clients to monitor and supervise its employees properly. The rule states: “[e]ach member shall establish and maintain a system to supervise the activities of each registered representative…that is reasonably designed to achieve compliance with applicable securities laws and regulations…” If a FINRA-member fails to supervise its employees or conduct proper due diligence on investment products, then the firm may be liable to the customer for damages or disciplined by FINRA, or both.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment damages investing with Infante while he worked for Wells Fargo, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please contact one of our attorneys at (800) 627-2179 to schedule a free consultation.