During the month of November, FINRA fined Next Financial Group, Inc. $400,000
and ordered the firm to pay restitution of $102,000 to clients. FINRA
stated the action was due to the absence of "a reasonable system
for reviewing the transactions of its registered representatives for excessive
trading." The regulatory action was the third significant action
against the company in three years.
"Due to the lack of a reasonable supervisory system, the firm failed
to detect excessive trading by a registered representative in five accounts,
resulting in about $102,376 in unnecessary sales charges," said FINRA.
FINRA's findings also indicate that in the instances when the firm's
system did raise a red flag, Next Financial Group did nothing to address
the issue. FINRA found at least 13 additional representatives, who handled
another 39 client accounts, who should have been identified and investigated
for potential excessive trading.
As reported by InvestmentNews, Next Financial Group, Inc. has a gross
revenue of $123.6 million. With 1,027 representatives, the firm has been
one of the fastest-growing, independent-contractor broker-dealers in the
industry over the past ten years. Previous regulatory actions against
the company were for issues related to supervisory jurisdiction and client
privacy. The company has neither admitted nor denied FINRA's findings.