FINRA’s Department of Enforcement investigated Oppenheimer’s business activities between April 5, 2005 and November 30, 2009 and alleged it failed to establish and maintain an adequate system to monitor, supervise, and control its extension of margin loans for foreign sovereign debt. According to FINRA, Oppenheimer’s supervisory procedures were deficient in three material aspects: 1) the written supervisory procedures failed to address how to assess the risks associated with extending margin credit for foreign sovereign bonds; 2) a lack of supervisory resources and personal to monitor the risks associated with investing in below-investment-grade (a/k/a junk) foreign bonds; and 3) a failure to assess whether a market existed for the aforementioned bonds.
Based upon the foregoing conduct, FINRA alleged Oppenheimer violated NASD Rules 3010 and 2110, as well as FINRA Rule 2010. Specifically, NASD Rule 3010(a) 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 Oppenheimer failed to establish and maintain an adequate system to monitor, supervise, and control its extension of margin loans for foreign sovereign debt, which constituted a violation of financial industry rules 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 lost money investing in foreign sovereign debt using margin loans through Oppenheimer, 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.