South Florida Brokerage Firm Sanctioned By FINRA in Unsuitable Investment Case

Newbridge Securities Corporation (CRD #104065) is a Boca Raton, Florida broker-dealer that is licensed to operate in 52 states and territories. On January 10th, 2025, the Financial Industry Regulatory Authority (FINRA) sanctioned Newbridge Securities Corporation for failure to supervise a registered representative for making unsuitable investment recommendations. Within this article, our Miami investment fraud attorney discusses the unsuitable investment case.

FINRA Enforcement Action: Unsuitable Investments (Newbridge Securities)

 Here is the core issue raised by FINRA: Regulators alleged that between July of 2015 and June of 2020, Newbridge Securities Corporation failed to properly supervise two of its representatives who were recommending risky margin trading strategies to five customers. Notably, margin trading allows customers to borrow money from a broker to buy more investments—but it also increases the risk of losing money. The five customers affected were not experienced investors. They reportedly did not fully understand the risks or the costs of using margin.

As an example, one incident involved a 62-year-old pastor who opened an account to save for retirement. His broker recommended 457 trades—with 447 of them being on margin. His account had 31 margin calls. That happens when the broker demands more money due to losses. In total, this investor lost money and paid over $34,000 in commissions. Newbridge apparently saw red the flags, but failed to investigate whether the broker’s recommendations were suitable.

Penalties Against Newbridge Securities Corporation

 Without admitting or denying any wrongdoing, Newbridge Securities Corporation consented to FINRA’s proposed penalties. Specifically, the South Florida brokerage firm agreed to a censure, a $60,000 fine, and payment of restitution of $45,442.21 plus interest.

 An Overview of FINRA’s Suitability Rule 

FINRA’s Suitability Rule (FINRA Rule 2111) is one of the most important in the securities industry. It requires financial professionals—and brokerage firms—to ensure that any investment recommendation that is made is suitable for the individual customer. They must take into account the customer’s age, financial situation, investment goals, risk tolerance, and other relevant factors. Brokers must have a reasonable basis to believe that a recommended strategy or any specific transaction fits the customer’s profile before making that recommendation.

To be clear, FINRA Rule 2111 applies not only to specific investment products but also to broader strategies, such as using margin accounts or frequent trading. Broker-dealers and their registered representatives are expected to perform due diligence and document the reasoning behind their advice. If recommendations are unsuitable and they cause harm to a client (investor), enforcement action can be taken. Further, an investor has the right to bring an unsuitable investment claim to seek compensation for any losses.

 Contact Our Miami Unsuitable Investment Lawyer Today

At ​Carlson & Associates, P.A., we are strong advocates for investor rights. If you suffered significant losses due to unsuitable investment recommendations, please do not hesitate to contact us today for a fully confidential initial consultation. Our firm is located in Miami and we fight for the rights of investors and throughout the region in South Florida.

Source:

brokercheck.finra.org/firm/summary/104065