The Financial Industry Regulatory Authority (“FINRA”) has censured and fined three broker-dealers for failing to reasonably supervise their representatives’ recommendations of an alternative mutual fund.
The three firms – Cambridge investment Research, Securities America, Inc. and J.W. Cole Financial – were cited in connection with investments in LJM Preservation & Growth Fund (“LJM Mutual Fund”), according to a recent Advisor Hub article.
FINRA ordered the three firms to pay a combined $550,000 in fines and $3.5 million in restitution.
In the FINRA Advice, Waiver & Consent Order with Securities America, Inc. (“SAI”) FINRA noted the following:
“Between August 17, 2016, and February 8, 2018, SAI failed to reasonably supervise representatives’ recommendations of an alternative mutual fund—the LJM Preservation & Growth Fund (LJM).1 SAI permitted the sale of LJM on its platform without conducting reasonable due diligence and without a sufficient understanding of its risks and features, including the fact that the fund pursued a risky strategy that relied, in part, on purchasing uncovered options.
SAI also lacked a reasonable supervisory system to 1 Ticker symbols were LJMIX, LJMCX and LJMAX. 2 review representatives’ LJM recommendations. SAI representatives sold more than $616,000 in LJM to thirty-three customers. LJM’s value dropped 80% during an extreme volatility event in February 2018 and the fund ultimately liquidated and closed, resulting in hundreds of thousands in losses for SAI’s customers.”
If you invested in the LJM Mutual Fund and lost money, or if you believe that you may have suffered financial losses due to the misconduct of a financial professional, we may be able to help. Our lawyers will review your investments, analyze your specific situation, and provide you with our opinion as to whether or not you may have a viable claim, free of charge.
Please contact us to discuss your potential claims.
