Summit Brokerage Services Censured, Fined $40,000 for Failure to Supervise
Summit Brokerage Services (CRD No. 34643) is a Boca Raton, FL-based broker-dealer that is licensed to sell securities in 51 U.S. states and territories. According to records obtained through FINRA’s BrokerCheck tool, this firm has 21 total disclosures on its records, including 16 regulatory actions and 5 FINRA arbitration awards.
On August 15th, 2019, FINRA announced that Summit Brokerage Services consented to findings that it failed to comply with securities industry supervisory standards. (FINRA Disciplinary Proceeding NO. 2018060477501). Below, our Miami investment fraud attorneys provide an overview of the sanctions brought against this South Florida brokerage firm.
A Review of the Facts and Violative Conduct
Registered brokerage firms have a legal obligation to develop and implement supervisory systems that adequately protect the rights and interests of their investors. Indeed, under FINRA Rule 3110, broker-dealers must have written policies and procedures in place that are reasonably designed to ensure compliance with all relevant securities laws and securities regulations.
When written procedures are in place that do satisfy industry standards, broker-dealers must actually follow those procedures.
In this case, Summit Brokerage Services put a supervisory policy in place that called for the review of outgoing correspondence between individual financial advisors and investors. The correspondence was to be reviewed by the members of the firm’s compliance department. FINRA determined that, between September of 2015 and March of 2018 more than 3,000 submissions from branch offices were never actually reviewed by a compliance officer as was called for by the firm’s supervisory procedures.
As a result of the brokerage firm’s failure to follow its own written supervisory rules, customers of Summit Brokerage Services were not protected by the safeguards that they were led to believe that they would be. For these reasons, FINRA deemed it appropriate to take regulatory action against this broker-dealer.
Imposition of Sanctions and Penalties
Although Summit Brokerage Services did not admit or deny any of the allegations raised by FINRA, the firm did consent to penalties proposed by the agency. Specifically, FINRA is requiring the broker-dealer to do the following three things:
- Acknowledge a public censure;
- Pay a $40,000 financial penalty; and
- Ensure proper supervisory policies are in place, and followed, going forward.
When brokerage firms fail to properly supervise individual securities representatives — whether because they negligently fail to create an adequate system of procedures in the first place, because they stop carrying out their procedures, or because they intentionally “look the other way” — affected investors can seek financial compensation for resulting losses.
Discuss Your Case With Our Miami, FL FINRA Arbitration Lawyers Right Away
At Carlson & Associates, P.A., our Florida securities fraud attorneys provide strong, skilled, and tenacious legal representation to investors. If you or someone you know suffered large losses because of a Florida brokerage firm’s failure to supervise a financial advisor, we are prepared to help and guidance. For a strictly confidential consultation, please call our Miami law office immediately.
Resources:
brokercheck.finra.org/firm/summary/34643
finra.org/sites/default/files/fda_documents/2018060477501%20Summit%20Brokerage%20Services%2C%20Inc.%20CRD%2034643%20AWC%20jm.pdf
