According to FINRA, Lincoln Financial failed to supervise approximately 1,7000 penny stock transactions in 15 customers’ accounts between January 2010 and September 2011. Without admitting or denying the facts, Lincoln Financial resolved the enforcement action and consented to a public censure and $90,000 fine.
FINRA’s Department of Enforcement investigated Lincoln Financial’s business activities between January 2010 and September 2011, and alleged it failed to establish and maintain an adequate system to monitor, supervise, and control one of its registered representative’s recommendation of 1,700 penny stock transactions in 15 customer accounts. According to FINRA, many of the aforementioned transactions were marked unsolicited when in fact they were solicited.
In addition, FINRA alleged that with respect to four customers, the registered representative recommended penny stock transactions that were unsuitable because they led to overconcentration of penny stocks in the customers’ accounts, and were contrary to the customers’ stated investment objectives. In permitting this misconduct to continue unfettered, FINRA alleged Lincoln Financial ignored numerous red flags and failed to enforce its written supervisory procedures.
Based upon the foregoing conduct, FINRA alleged Lincoln Financial violated several financial industry rules and regulations, including but not limited to, NASD Conduct Rule 3010(b) and FINRA Rules 2010. NASD Rule 3010(b) requires each member to establish and maintain a system of supervision that is reasonably designed to achieve compliance with applicable securities laws and regulations and with applicable NASD and FINRA Rules. Here, FINRA alleged Lincoln Financial failed to establish a supervisory system reasonably designed to detect solicited penny stock transactions and to monitor the suitability of low-priced securities transactions.
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 penny stocks through Lincoln Financial, 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.