Maxim Group LLC a brokerage firm headquartered in New York New York has been censured and fined $65,000.00 by Financial Industry Regulatory Authority (FINRA) based upon the firm’s consent to findings that it failed to supervise its stockbrokers’ recommendations of unit investment trusts to ensure that they were not unsuitable for customers. Letter of Acceptance Waiver and Consent No. 2016047630702 (Oct. 19, 2018).
According to the AWC, between January 1, 2012 and January 31, 2017, Maxim Group failed to put in place necessary procedures for addressing suitability issues from trading unit investment trusts on a short-term basis. Evidently, the firm failed to set forth the use of exception reports and surveillance reports for detecting instances in which unit investment trusts were frequently traded. In addition, the AWC stated that supervisors and brokers had not been provided any training whatsoever on the unit investment trusts products that had been recommended to the customers of the firm by the firm’s stockbrokers.
The AWC also revealed that throughout the 2012 to 2017 timeframe, many of Maxim’s stockbrokers advised customers to place short-term trades of the unit investment trusts. FINRA stated that most of the stockbrokers’ unit investment trust recommendations centered on products containing sales charges which ranged between 1.95% and 3.95%, and which contained twenty-four month maturities. Despite the high costs and twenty-four month maturities, the firm’s stockbrokers continuously advised the customers to get rid of the unit investment trusts in less than twelve months. In fact, on average, customers reportedly only held the unit investment trusts products for three hundred and ten days before they had been sold.
Moreover, the AWC reported that on a number of occasions, the proceeds obtained by customers from their short term sale of unit investment trusts had been used to buy more unit investment trusts that contained the same exact objectives as the unit investment trust products previously sold by the customers. Consequently, the short-term trading of unit investment trusts caused customers to be assessed $167,780.49 in excess sales charges. FINRA found that the firm’s conduct was violative of FINRA Rules 2010, 3110 and National Association of Securities Dealers (NASD) Rule 3010.
The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.
This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship. Attorney Advertisement. See Important Disclaimer
Guiliano Law Group
Our practice is limited to the representation of investors. Over the last three decades, we have recovered more than a hundred million dollars for more than 1,000 injured investors from across the United States. We accept representation purely on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a confidential consultation or a no obligation evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
