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Ten of the biggest regulatory fines of 2014

Industry regulators handed out some hefty fines to financial firms in 2014, due to a variety of misdeeds and oversights. We’ve pulled together a rundown of 10 of the biggest fines handed out this year, presented in order of the amount of the fine. These are all fines given to firms, so individual broker or adviser penalties are excluded. Click through to see what caused firms to come under the most regulatory scorn in 2014.

Firm Fined Fine Amount Summary Reason
WFG Investments $700,000 supervisory failures Failing to commit the time, attention and resources to a range of critical obligations in its supervision of registered reps
Berthel Fisher & Co. Financial Services Inc. $775,000 compliance Failure to supervise the sale of alternative investments such as non-traded REITs and leveraged and inverse ETFs
LPL Financial $950,000 alternatives sales Supervisory deficiencies related to sales of nontraded REITs, oil and gas partnerships, business development companies, hedge funds, managed futures and other illiquid investments.
Stifel Nicolaus & Co. and its subsidiary, Century Securities Inc. $1,000,000 ETFs Selling leveraged and inverse ETFs to customers for whom the investments were unsuitable, as well as the firms not having proper training or written procedures in place to make sure their advisers had an “adequate and reasonable basis” for recommending the products.
Morgan Stanley $1,000,000 Retired brokers Supervisory deficiencies related to sales of nontraded REITs, oil and gas partnerships, business development companies, hedge funds, managed futures and other illiquid investments.
2 independent broker-dealers owned by Ladenburg Thalmann Financial Services Inc $1.275 million Failure to supervise Failure to supervise hundreds of brokers who created and sent false and inaccurate consolidated account statements to clients.
Wells Fargo $1.5 million Identify verification Failing to properly vet some 220,000 new customer accounts by doing the necessary identity verification to comply with anti-money laundering requirements.
Bank of America Merrill Lynch $8 million Mutual fund sales charges Failing to waive mutual fund sales charges for certain charities and retirement accounts.
Citigroup Inc. $15 million Non-public research Not adequately protecting against “potential selective dissemination of non-public research to clients and sales and trading staff.”
J.S. Oliver Capital Management $15 million Cherry Picking Breach of fiduciary duty and violations of securities laws via an alleged cherry-picking scheme that defrauded several clients out of about $10.9 million.

Source: Investment News (December 2014)
http://www.investmentnews.com/gallery/20141223/FREE/122309999/PH/10-of-the-biggest-regulatory-fines-of-2014

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