Brett Stephen Briggs of Los Angeles California a stockbroker and supervisor formerly registered with Financial West Group has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any principal capacity and has been fined $20,000.00 supported by findings that he failed to supervise stockbrokers at Financial West Group. Letter of Acceptance Waiver and Consent No. 2017054755207 (Nov. 17, 2020).
According to the AWC, from December of 2013 to July of 2017, Briggs was a supervisor for four stockbrokers and was responsible for ensuring that their recommendations to Financial West Group customers was appropriate for them. FINRA stated that Briggs’s supervision was inadequate as he was aware of red flags regarding those stockbrokers’ trades and did not take proper steps to investigate or safeguard investor accounts.
Briggs was alerted by a compliance principal at Financial West Group that excessive trades might have been made in customer accounts that were linked to two of the stockbrokers. Briggs was notified of more red flags between January of 2014 and November of 2016. This served as a proper basis for Briggs to investigate trades placed in nine customer accounts by the four stockbrokers under his command.
Among the red flags were a monthly account supervision exception report which noted that certain of the customers’ accounts had a large number of transactions and high turnover rates. There was also a trade blotter used by the securities broker dealer which signaled that high commissions were charged to customers. FINRA mentioned that trades were also made by stockbrokers on an in-and-out basis.
Other concerns which called for an investigation into the stockbrokers included trades which were made on a short-term basis in customer accounts when this conflicted with the customers’ investment objectives. There were also leveraged or inverse exchange traded fund (ETF) positions which had been held in customer accounts for prolonged periods. Trades of low-priced securities were made on a short-term basis too. FINRA also noted that at least one customer account contained speculative options trades which were not compatible with the customer’s risk tolerance and objectives for investing.
The regulator pointed out that losses had been sustained in customer accounts because of the excessive trades made by the stockbrokers under Briggs’s watch. There was no point where Briggs scrutinized the activities of the stockbrokers. There was no investigation undertaken by Briggs to determine whether transactions were qualitatively or quantitatively unsuitable and violative of FINRA rules.
FINRA mentioned that in one case, Briggs was informed by a principal that a customer’s account contained an unsuitable double-leveraged exchange traded fund for 520 days. The account was held by a customer who had goals of capital appreciation, income and capital appreciation. The supervisor did not adequately investigate but instead ignored the red flags which enabled the unsuitable trading of his subordinate stockbrokers to continue.
FINRA also stated that Briggs earned $52,432.81 in compensation including ticket credits and commission overrides relating to the qualitatively unsuitable and excessive trades placed by those four stockbrokers. Those commission overrides ranged between 15 percent and 40 percent of the total amounts charged to customers for transactions. FINRA determined that Briggs’s conduct was violative of FINRA Rules 2010, 2360(b)(20) and 3110(a).
FINRA Public Disclosure confirms that Briggs has been identified in four customer initiated investment related disputes involving accusations of his poor conduct during the time that he was registered with securities broker dealers including Interfirst Capital Corp and First Allied Securities. Briggs has been referenced in a customer initiated investment related arbitration claim which was resolved for $17,850.00 in damages based upon allegations of negligence and failure to supervise options transactions.
Briggs is also the subject of a customer initiated investment related arbitration claim in which the customer was awarded compensatory damages founded on findings of fraud and suitability concerning equities and options transactions. The claim alleges that the customer’s account was churned and that a fiduciary duty had been breached by the stockbroker. According to the claim, unauthorized trades were also executed in the First Allied Securities customer’s account.
Briggs’s registration with Financial West Group was terminated on August 21, 2017. He has been registered with Western International Securities Inc. since August 21, 2017.
