Truist Fined $275,000 After Broker Moved Losing Trades Into Customer Accounts

Truist Investment Services, Inc. agreed to a censure and a $275,000 fine under a Letter of Acceptance, Waiver, and Consent (AWC) with FINRA. According to FINRA, from at least March 2023 to July 2023, a Truist representative canceled losing trades in his personal account and moved them into customers' accounts without their knowledge. Truist failed to identify and investigate the red flags. FINRA also found that, from at least March 2023 to August 2023, Truist lacked a supervisory system reasonably designed to detect improper trade corrections. FINRA found that the firm violated FINRA Rules 3110(a), 3110(b), and 2010. Truist consented to FINRA's findings without admitting or denying them.

Truist Investment Services became a FINRA member firm in July 1986 and conducts a general securities business with retail customers. The firm is headquartered in Atlanta, Georgia, and has more than 2,100 registered representatives at 2,614 branches. The representative at the center of the case, identified in the AWC as Representative A, joined the firm in November 2022. Truist terminated him and filed a Form U5 on September 13, 2023, and FINRA barred him in February 2025 for refusing to appear for testimony.

FINRA Rule 3110 requires firms to establish and maintain a supervisory system, including written procedures, reasonably designed to ensure that their representatives follow securities laws and FINRA rules. The duty to supervise also requires firms to reasonably investigate red flags that suggest misconduct and to act on the results. For example, a firm would violate this rule if it approved trade corrections without checking whether trades were being moved out of a broker's own account. A firm would also violate it by ignoring a sudden increase in a broker's correction requests.

According to FINRA, Representative A actively traded in his personal Truist account and frequently received margin calls. On about 14 occasions, after the value of a position in his own account declined, he allegedly submitted a trade correction request to cancel the trade and rebill it to a customer's account. Truist approved the requests, and the customers allegedly suffered losses on nearly every trade because the positions lost value before the corrections. FINRA identified several red flags that Truist missed. The correction requests included a "Short Name" field showing that the trades came from the representative's own account. One request sought to move a trade placed a month earlier, and he submitted at least eight correction requests in June and July 2023. Truist did not discover the scheme until August 2023, after alerts from its clearing firm. FINRA noted that Truist terminated the representative, improved its supervision, conducted a lookback review, hired an outside consultant, and paid full restitution to the affected customers.

Lufrano Law, LLC is a national investment litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. Please contact us at (800) 627-2179 for more information if you have been the victim of investment negligence or fraud.

The content on this site reflects personal opinions and does not constitute statements of fact. No findings have been made against the firms or individuals mentioned. This blog is intended solely for educational purposes, drawing on publicly available information to provide general insights and a basic understanding of the law. It is not a substitute for legal advice.