FINRA’s Department of Enforcement investigated Golightly’s alleged misconduct and found he failed to appropriately supervise the sales practices of a registered representative who engaged in unsuitable trading in the brokerage and advisory accounts of his customers. According to FINRA, WFG Investments authorized the broker to execute private securities transactions away from WFG Investments through an RIA. Golightly was charged with supervising this broker’s activity in customer’s accounts.
However, FINRA alleged Golightly failed to adequately supervise the broker when he recommended low-priced securities (less than $5) to most of his clients. For example, during the year 2012, 67% of the broker’s advisory account purchases and 66% of his WFG account purchases were in low-priced securities. In 2013, the broker’s percentage of advisory account purchases in low-priced securities rose to 80%. According to FINRA, the broker’s excessive activity triggered numerous “red flags,” which Golightly ignored and/or inadequately responded to in an appropriate fashion. Golightly’s supervisory failures allowed the broker to violate WFG Investment’s written supervisory procedures by inappropriately concentrating his customers’ accounts in low-priced securities, among other things.
Based upon the foregoing misconduct, FINRA alleged Golightly violated several financial industry rules and regulations, including NASD Rules 3010(a) and (b), 3040(c)(2), and FINRA Rule 2010. 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…”
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 damage investing in low-priced securities through WFG Investment’s San Antonio, Texas office from 2012 to 2013, you may be eligible to participate in a FINRA arbitration proceeding to recoup your losses. Please complete our contact below or contact one of our attorneys at (800) 627-2179.