FINRA’s Department of Enforcement recently investigated CAMS and determined its supervisory systems and procedures were inadequate and contributed to several specific supervisory failures. FINRA cited the following supervisory deficiencies as evidence CAMS’ supervisory and compliance functions were faulty, among other things:
Inadequate supervision of variable annuity sales and suitability requirements;
Failed to maintain a complete and accurate trade blotter;
Failed to reasonably supervise private securities transactions;
Inadequate supervision of email communications; and
Insufficient supervision of representative’s distribution of consolidated reports.
As a result of the aforementioned misconduct, FINRA alleges CAMS 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 losses as a CAMS customer, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please complete the contact form below or contact one of our attorneys at (800) 627-2179 to schedule a free consultation.