Oppenheimer Fined by Finra Over Sales of Complex ETFs to Seniorsby
Firm failed to enforce its own restrictions, regulator says
Brokerage has faced a series of sanctions over its policies
Oppenheimer & Co. will pay more than $2.9 million to settle a U.S. brokerage-regulator’s claims that the firm sold unsuitable non-traditional exchange-traded funds to customers.
The company failed to enforce sales policies tied to leveraged, inverse and inverse-leveraged exchange-traded funds, leading to improper sales to conservative elderly investors, the Financial Industry Regulatory Authority said in a statement Wednesday.
Policies restricting sales to retail customers had been established by Oppenheimer in response to a 2009 Finra advisory on the risks and complexities of non-traditional ETFs, according to the regulator. Brokers continued selling to customers who didn’t meet the company’s criteria for more than four years because of lax oversight, Finra said.
“Written procedures are worthless unless accompanied by a program to enforce them,” Finra enforcement chief Brad Bennett said in the statement.
Oppenheimer agreed to resolve the allegations without admitting or denying wrongdoing, and will pay a $2.25 million fine and $716,000 in restitution to affected customers.
The New York-based firm was fined by Finra in December for failing to establish an adequate system to address short positions in municipal bonds and in March 2015 for missing a broker’s theft from clients. The Securities and Exchange Commission sued three former employees of the brokerage in July over unregistered sales tied to penny stocks.