Mass. Sues Bank Affiliated BD for Failing to Discipline Brokers
The Massachusetts Securities Division has filed an administrative complaint against a bank-affiliated broker-dealer for failing to supervise two brokers alleged to have made unsuitable recommendations of agency bonds. According to the MSD complaint, a banker (who had a Series 6) was concerned about losing $2 Million in CD redemption proceeds of a client who sought preservation of principal but higher yields. According to the complaint, the banker brought in a Series 7 colleague and recommended the agency bonds because of their higher yield and government guarantee, although the bonds were not guaranteed. The MSD alleges that the activities violated specific provisions of the firms’ Compliance Manual and that the firm’s Compliance function highlighted the violations. According to the MSC, the firm lauded the banker and broker, rather than discipline them.