FINRA fined Newbridge Securities Corp. for failing to supervise two reps' recommendations that customers use margin in multiple accounts, recommendations that FINRA deemed unsuitable and suggested to customers who were not experienced enough for use of margin, and who suffered losses as a result.
According to the findings, Newbridge failed to reasonably supervise its representatives when they recommended unsuitable margin use to customers who were not experienced or sophisticated investors and thus didn't understand how margin would be used in their accounts, including the extent of margin use and the costs associated with its use.
For example, one customer — a pastor in his 60s with no prior margin experience — realized significant losses in his account, plus $34,000 of margin interest.
The report states that due to the unsuitable margin use recommendations, the customers purchased more securities than they would have otherwise acquired, leading to increased commission fees and customers finding that some of their accounts at times were majority-margin (margin comprised more than 50% of their accounts).
All five accounts realized losses, according to investigators, which included losses due to margin calls and over $60,000 in margin interest, in addition to the increased commission charges.
If you invested with Newbridge Securities or with any broker or investment advisor who unsuitably recommended the use of margin in your investment accounts, resulting in losses, excessive margin interest fees and commission charges, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.