Bad Brokers

According to FINRA, BNP Paribas Securities Corp. was censured and fined $125,000 in January 2026 for failing to accurately report over-the-counter (OTC) options positions to the Large Options Positions Reporting (LOPR) system, stemming from a series of separate technical and operational failures tha...

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According to FINRA, BNP Paribas Securities Corp. was censured and fined $125,000 in January 2026 for failing to accurately report over-the-counter (OTC) options positions to the Large Options Positions Reporting (LOPR) system, stemming from a series of separate technical and operational failures that went undetected due to inadequate supervisory procedures.FINRA found that the New York-based firm experienced multiple distinct reporting failures, all arising from transactions where it acted as an intermediary between its foreign affiliates and U.S.-based customers. In October 2019, the firm migrated to a new LOPR reporting system that was not configured to receive updates on salesperson location information. Over time, that data became outdated and inaccurate, causing the firm to miss reporting obligations for certain intermediated transactions. The firm discovered the issue but delayed reporting open positions until March 2021.Additional failures compounded the problem. One of the firm's trading systems began erroneously excluding salesperson information when passing trade data to the LOPR system. The firm also inadvertently excluded from consideration all transactions involving non-U.S.-based funds—some of which were eligible for LOPR reporting. A U.S. salesperson erroneously selected the wrong trader identifier when entering transactions, causing certain trades to be misattributed. Finally, one trading system placed salesperson location information in the wrong data field, preventing the LOPR system from recognizing certain large options positions. Each of these issues was separately identified and remediated by the firm.FINRA also found that the firm's supervisory system was not reasonably designed to achieve compliance with FINRA Rule 2360(b)(5). The firm's random review of selected options transactions was not configured to ensure that a sufficient number of intermediated transactions would be reviewed for LOPR reporting compliance. After the examination, the firm implemented new procedures that recalculated LOPR eligibility on a daily basis to confirm each position was properly reported.The LOPR system is a key regulatory tool that helps FINRA monitor concentration risk and potential market manipulation in the options markets. When firms fail to report large options positions accurately, regulators lose visibility into market activity that could signal manipulation or systemic exposure. Investors should understand that large financial institutions are required to maintain robust reporting infrastructure, and that FINRA actively audits these systems to ensure compliance.

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According to FINRA, ABN AMRO Capital Markets (USA) LLC was censured and fined $50,000 in January 2026 for conducting a securities business on 84 days while failing to maintain the minimum net capital required under SEC and FINRA rules, for maintaining inaccurate books and records, and for filing ina...

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According to FINRA, ABN AMRO Capital Markets (USA) LLC was censured and fined $50,000 in January 2026 for conducting a securities business on 84 days while failing to maintain the minimum net capital required under SEC and FINRA rules, for maintaining inaccurate books and records, and for filing inaccurate financial reports with regulators—all stemming from an improper classification of a financial transaction.FINRA found that the New York-based firm entered into a reverse repurchase transaction with its parent bank involving U.S. Treasury securities held as collateral in a segregated account owned by, and in the name of, the parent bank. Because the collateral was neither in the firm's possession or control, nor outside the parent bank's control, the firm should have treated the entire contract value of the reverse repurchase agreement as a non-allowable asset in its net capital calculations. Instead, it improperly classified the transaction as an allowable asset. This misclassification resulted in the firm operating with net capital deficiencies that ranged from approximately $1,900 to approximately $8.3 million, with an average deficiency of approximately $665,000 over the relevant period.The misclassification also caused the firm to file inaccurate Financial and Operational Combined Uniform Single (FOCUS) reports with regulators. These reports overstated the firm's net capital by amounts ranging from approximately $23 million to $25 million—a significant discrepancy that hindered regulators' ability to effectively monitor the firm's true financial condition. The firm also failed to file timely notices of its net capital deficiencies, which meant that FINRA and the SEC remained unaware of the problem until it was discovered during a FINRA examination.Net capital requirements exist to ensure that broker-dealers maintain sufficient liquid assets to meet their obligations to customers and counterparties. When a firm operates below minimum net capital levels, it poses heightened risk to clients and market participants who depend on that firm to fulfill its obligations. Accurate FOCUS reporting is essential for regulators to perform meaningful financial oversight. Investors should be aware that FINRA monitors broker-dealer financial health and takes action when firms fall below required capital thresholds, even when the underlying cause is a technical misclassification rather than intentional fraud.

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According to FINRA, three affiliated Cetera entities—Cetera Advisors LLC, Cetera Investment Services LLC, and Cetera Wealth Services, LLC (formerly Cetera Advisor Networks LLC)—were censured and fined a combined $1,100,000 in January 2026 for failing to establish supervisory systems adequate to prev...

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According to FINRA, three affiliated Cetera entities—Cetera Advisors LLC, Cetera Investment Services LLC, and Cetera Wealth Services, LLC (formerly Cetera Advisor Networks LLC)—were censured and fined a combined $1,100,000 in January 2026 for failing to establish supervisory systems adequate to prevent potential unregistered securities sales and money laundering activity, and for related supervisory and record-keeping failures involving consolidated financial reports sent to customers.FINRA found that the firms' supervisory systems were not reasonably designed to achieve compliance with Section 5 of the Securities Act of 1933, which prohibits the sale of unregistered securities. Before April 2021, the firms did not require registered representatives to complete questionnaires for electronic deposits of low-priced securities, even though most such securities arrived electronically. As a result, the firms allowed customers to deposit and sell millions of shares of low-priced securities and wire out the proceeds without detecting or reasonably investigating red flags that could have signaled unregistered distribution activity.The firms' anti-money laundering (AML) compliance programs were also found deficient. Their written policies and procedures required monthly reviews of low-priced securities deposits and transactions but provided no guidance on how to identify suspicious transactions. There was no mechanism for monitoring the specific red flags associated with suspicious activity in low-priced securities, leaving the firms without a functional framework for detecting and reporting potentially suspicious conduct as required by the Bank Secrecy Act.Additionally, Cetera Advisors failed to reasonably supervise the creation and dissemination of consolidated reports—documents that aggregate a customer's total financial picture across multiple accounts. The firm's procedures required representatives to verify any manually entered data, but supervisors were not required to confirm compliance. The firm also failed to address consolidated reports sent through its proprietary system, third-party vendor platforms, or custom templates created by representatives. As a result, tens of thousands of consolidated reports sent to customers were neither reviewed nor retained as required by Exchange Act Rule 17a-4(b)(4).For investors, this case illustrates two important themes. First, low-priced securities—often called penny stocks—carry elevated risks of fraud and manipulation, and firms have a duty to scrutinize deposits and sales of these securities. Second, consolidated reports can provide a misleading view of a customer's finances if they contain inaccurate manually entered data and go unreviewed. Investors should ask their broker how consolidated reports are prepared, verified, and supervised.

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According to FINRA, Virtu Americas LLC was censured and fined $200,000 in January 2026 for failing to take reasonable steps to ensure that the intermarket sweep orders (ISOs) it routed to certain market centers met applicable regulatory requirements—potentially resulting in a failure to execute agai...

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According to FINRA, Virtu Americas LLC was censured and fined $200,000 in January 2026 for failing to take reasonable steps to ensure that the intermarket sweep orders (ISOs) it routed to certain market centers met applicable regulatory requirements—potentially resulting in a failure to execute against protected quotations at other trading venues.FINRA found that the New York-based firm used an automated program to send limit orders marked as ISOs to execute against equal- or better-priced quotations displayed at other trading centers. However, the logic in the firm's automated program was not appropriately configured for DAY ISOs transmitted to the exchanges. Instead of routing limit orders correctly marked as ISOs, the program in certain instances routed limit orders that were not marked as ISOs. Because the firm was obligated to route these orders as ISOs—and failed to do so—it potentially missed executing against protected quotations during the relevant review period.ISOs are an important mechanism under Regulation NMS, the SEC rule that governs order routing and the protection of quotations across trading venues. When a firm routes an ISO, it is attesting that it has simultaneously routed orders to execute against all better-priced protected quotations displayed at other trading centers. Mismarking orders as ISOs—or failing to correctly use ISO routing when required—can undermine Reg NMS's core goal of ensuring that investors receive the best available prices across the national market system.Of the $200,000 total fine, $6,930 was apportioned to FINRA, with the remainder distributed to other regulators participating in the settlement. Virtu Americas cooperated with the examination and remediated the configuration issue in its automated routing program.For investors, this case serves as a reminder that the integrity of automated trading systems depends heavily on accurate configuration and ongoing supervisory oversight. Even small technical errors in order routing logic can have broad market impact when they affect large volumes of trades. Firms that operate automated trading infrastructure have a responsibility to regularly test and validate their systems to ensure they comply with applicable rules governing trade execution and order routing.

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According to FINRA, Stirlingshire Investments was censured and fined $40,000 in January 2026 for violating Regulation Best Interest by failing to establish and enforce a supervisory system for recommendations of non-traditional exchange-traded funds (NT-ETFs), and for failing to timely file required...

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According to FINRA, Stirlingshire Investments was censured and fined $40,000 in January 2026 for violating Regulation Best Interest by failing to establish and enforce a supervisory system for recommendations of non-traditional exchange-traded funds (NT-ETFs), and for failing to timely file required offering materials with FINRA for two private placement offerings sold to 21 investors.FINRA found that three of the New York-based firm's registered representatives recommended NT-ETFs—specifically inverse or leveraged exchange-traded funds—to more than 25 retail customers. These are complex products that reset daily and are generally intended for short-term trading, not long-term investment. They can rapidly diverge from the performance of the underlying index when held beyond a single trading day, making them unsuitable for many retail investors.The firm's written supervisory procedures (WSPs) actually contained an explicit prohibition on NT-ETF purchases in customer accounts and instructed supervisors to cancel all such purchases. Despite having this rule in place, the firm failed to enforce it. It put in place no alerts, exception reports, or other supervisory tools or procedures to identify and review NT-ETF recommendations made by its representatives. In other words, the firm had a policy it did not follow and no mechanism to detect when the policy was being violated. This failure constituted a violation of Reg BI's Care Obligation, which requires firms to establish policies reasonably designed to ensure representatives make recommendations in customers' best interests.Separately, FINRA found that the firm failed to file offering materials with FINRA for two private placement offerings issued by the firm's parent company, which a registered representative sold to 21 investors. The firm ultimately filed the required materials—but only two years after the last sale had been completed.For investors, this case highlights two key lessons. First, non-traditional ETFs are not buy-and-hold investments, and any broker recommending them should be able to clearly explain why the product is appropriate for your specific investment goals and time horizon. Second, private placement offerings are required to be disclosed to regulators, and delays in filing can obscure important information from the supervisory review process. Investors considering private placements or complex ETF products should ask pointed questions about suitability and ensure their broker has disclosed the investment to the appropriate regulatory authorities.

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According to FINRA, TPEG Securities, LLC was censured and fined $175,000 in January 2026 for three separate violations: using misleading aggregated performance metrics in communications with prospective investors, failing to properly report customer complaints to FINRA, and maintaining a supervisory...

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According to FINRA, TPEG Securities, LLC was censured and fined $175,000 in January 2026 for three separate violations: using misleading aggregated performance metrics in communications with prospective investors, failing to properly report customer complaints to FINRA, and maintaining a supervisory system that did not reasonably address complaint reporting obligations.FINRA found that the Southlake, Texas-based firm sent numerous communications that included aggregated Internal Rates of Return (IRR) and Cash Multiple Values relating to a sponsor's prior closed investment deals. While individual deal performance can meaningfully inform investors about a sponsor's track record, aggregating those metrics into a single blended figure masks the performance of individual closed deals and is not representative of any specific investment return an investor would have received. FINRA determined that this practice violated FINRA Rule 2210(d)(1)(B), which requires that communications with the public be fair, balanced, and not misleading.FINRA also found that the firm failed to report statistical and summary information regarding written customer complaints as required under FINRA Rule 4530(d). The firm misunderstood the nature of certain grievances and its corresponding reporting obligations. Additionally, the firm failed to disclose certain customer complaints against registered representatives in required Form U4 filings, applying an overly narrow interpretation of what constitutes a reportable complaint. Complaint disclosure is a cornerstone of investor protection—it allows investors to research a broker's history through FINRA BrokerCheck and make informed decisions about who to trust with their money.Underlying both failures was a deficient supervisory system. The firm's WSPs discussed customer complaints in general terms but did not provide meaningful guidance to representatives on how to identify a reportable complaint, how to distinguish between complaints directed at the non-regulated issuer versus the broker-dealer, or the specific criteria triggering a statistical filing under Rule 4530(d) or a Form U4 disclosure. After FINRA's examination, the firm updated its WSPs to address these deficiencies.For investors, this case delivers clear lessons: aggregated return metrics in investment marketing materials should be scrutinized carefully, as they can obscure poor individual deal performance. Investors should also take full advantage of FINRA BrokerCheck, which relies on accurate complaint reporting to provide a complete picture of a broker's regulatory history. Firms that underreport complaints deprive the public of important information.

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According to FINRA, The GMS Group, LLC was censured and fined $35,000 in January 2026 for failing to establish written supervisory policies and procedures reasonably designed to comply with Regulation Best Interest (Reg BI) and the Form CRS customer relationship summary requirements—two foundational...

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According to FINRA, The GMS Group, LLC was censured and fined $35,000 in January 2026 for failing to establish written supervisory policies and procedures reasonably designed to comply with Regulation Best Interest (Reg BI) and the Form CRS customer relationship summary requirements—two foundational investor protection rules adopted by the SEC in 2019.FINRA found that the East Hanover, New Jersey-based firm's policies and procedures failed to describe the specific steps representatives should take to make recommendations in customers' best interests. They provided no methods for supervisors to review recommendations for compliance with Reg BI's Care Obligation, such as procedures for evaluating whether representatives had considered costs and reasonably available alternatives before making a recommendation. Equally absent was any framework addressing Reg BI's Conflict of Interest Obligation—the firm's policies provided no mechanism for identifying, disclosing, or mitigating conflicts of interest associated with recommendations to retail customers. There was also no framework for preventing, detecting, or promptly correcting Reg BI violations. The firm ultimately revised its WSPs to address these deficiencies.FINRA also found that the firm's written procedures were deficient with respect to Form CRS obligations under Exchange Act Rule 17a-14. Form CRS is a brief, standardized document that broker-dealers and investment advisers must provide to retail investors, summarizing services, fees, conflicts of interest, and other key information. The firm's WSPs contained no procedures for preparing, filing, or updating the Form CRS; delivering it to prospective or new retail customers; creating or maintaining records related to it; or designating a supervisor responsible for ensuring compliance with Form CRS obligations. The firm ultimately revised its WSPs to address these gaps as well.For investors, this case serves as a reminder that Reg BI and Form CRS are not just paperwork requirements—they are designed to give retail investors meaningful protections and clearer information. Investors should request a copy of their broker's Form CRS before opening an account, review it carefully to understand how their broker is compensated, and ask questions about any conflicts of interest identified. A firm with robust Reg BI policies is better positioned to ensure its brokers are consistently acting in customers' best interests.

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According to FINRA, Aegis Capital Corp. was censured and fined $375,000 in January 2026 for three categories of violations: improperly soliciting private placement offerings in ways that violated the Securities Act of 1933, sending misleading retail communications to prospective investors, and faili...

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According to FINRA, Aegis Capital Corp. was censured and fined $375,000 in January 2026 for three categories of violations: improperly soliciting private placement offerings in ways that violated the Securities Act of 1933, sending misleading retail communications to prospective investors, and failing to provide required notices when it stopped publishing research coverage of a publicly traded company.FINRA found that the New York-based firm's written policies and procedures did not inform representatives or supervisors about what constitutes an illegal general solicitation or general advertising under Rule 506(b) of Regulation D—the exemption the firm relied upon for its private placements. The firm had no system to verify whether prospective offerees had a pre-existing, substantive relationship with the firm prior to being solicited, and no designated supervisors responsible for ensuring representatives had such relationships before reaching out. In practice, the firm sent mass marketing emails to hundreds of recipients in connection with some offerings, and sold securities totaling approximately $48 million to customers with whom it could not demonstrate a substantive pre-existing relationship. These failures caused the firm to sell securities in violation of Section 5 of the Securities Act.The firm also sent retail communications relating to private placements that omitted key risks of the offerings—failing to provide a fair and balanced presentation—or that made exaggerated and unwarranted claims. FINRA Rule 2210 requires all communications with the public to be fair, balanced, and based on principles of fair dealing and good faith.Additionally, FINRA found that the firm failed to provide prompt written notice to customers when it terminated research coverage of an issuer. When the firm's research analyst covering a particular company left in August 2017, the firm stopped publishing research for two and a half years without issuing a required termination notice or final research report. The firm later relaunched coverage with "buy" ratings from January through October 2020, then stopped again—and did not notify customers of that second termination for more than four and a half years, and only after FINRA specifically raised the issue. During this period, the company's share price declined significantly.For investors, this case illustrates the risks of relying on research from firms that do not maintain rigorous coverage standards. Investors in private placements should also understand that Rule 506(b) offerings may only be marketed to those with whom the broker has a genuine, substantive pre-existing relationship—mass solicitations are prohibited. Always verify that communications from your broker present a balanced view of risks and are not merely promotional.

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According to FINRA, Benjamin F. Edwards & Company, Inc. was censured and fined $750,000 in January 2026 for failing to reasonably supervise business-related text messages sent by its employees, failing to preserve those communications as required by applicable rules, and separately failing to comply...

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According to FINRA, Benjamin F. Edwards & Company, Inc. was censured and fined $750,000 in January 2026 for failing to reasonably supervise business-related text messages sent by its employees, failing to preserve those communications as required by applicable rules, and separately failing to comply with its discovery obligations during a FINRA arbitration proceeding.FINRA found that the St. Louis-based firm's supervisory system had no process or procedures—written or otherwise—for monitoring whether employees were complying with its own text messaging policies. Those policies generally prohibited business use of text messaging except through a firm-approved software application that would capture and preserve the messages. Despite this prohibition, registered representatives—including at least one senior executive—routinely used unapproved text messaging for business-related communications. The firm failed to identify or address this conduct, and when a FINRA arbitration panel issued discovery sanctions against the firm in October 2019, the firm still failed to take adequate corrective action.At least five registered representatives, including one senior executive, sent and received at least 3,560 business-related text messages through unapproved applications on their personal devices. These messages involved sensitive client communications, including receiving investment directives and personal information from customers and giving investment advice. Failing to capture and preserve these communications means that both customers and regulators may be unable to reconstruct what actually occurred in those advisory relationships if a dispute arises.The firm's discovery failures in a FINRA arbitration added to the violation. In September 2017, another broker-dealer filed an arbitration against the firm related to the recruiting of four of its registered representatives. The arbitration panel ordered the firm to produce responsive electronic communications by November 2018. The firm failed to timely and fully comply. Depositions in July 2019 revealed the existence of additional responsive text messages that had not been produced. The arbitration panel issued two separate sanction orders—in May and October 2019—as a result of the firm's discovery failures.For investors, this case underscores the importance of electronic communications recordkeeping. When brokers conduct business through personal devices and unapproved apps, investors lose an important layer of protection: the ability to access documentation of their conversations if a dispute arises. Investors should confirm that communications with their broker are conducted through firm-approved channels, which helps ensure that records are preserved and available if needed.

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According to FINRA, Jeffrey Kenneth Galvani and Stuart A. Jeffery were both permanently barred from association with any FINRA member firm in January 2026, following a FINRA Office of Hearing Officers (OHO) decision that became final. The sanctions were based on findings that both individuals failed...

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According to FINRA, Jeffrey Kenneth Galvani and Stuart A. Jeffery were both permanently barred from association with any FINRA member firm in January 2026, following a FINRA Office of Hearing Officers (OHO) decision that became final. The sanctions were based on findings that both individuals failed to provide on-the-record testimony requested by FINRA in connection with an investigation into their roles with outside entities that provided services to customers who traded low-priced securities, commonly known as penny stocks, and their disclosures to their member firm about those activities.Penny stocks—typically defined as shares of small companies trading at low prices, often outside major exchanges—are a frequent vehicle for fraud and manipulation. FINRA's investigation sought to examine what roles Galvani and Jeffery played with entities that provided services to penny stock traders, and whether they had properly disclosed those activities to their employer firm as required by FINRA rules. Both individuals refused to cooperate with FINRA's request for on-the-record testimony, which FINRA treats as a fundamental obligation for all registered persons.FINRA Rule 8210 requires registered persons and associated persons of member firms to provide information, documents, and testimony requested by FINRA in connection with its regulatory investigations. Refusing to comply with a Rule 8210 request is itself a violation of FINRA rules and typically results in a permanent bar from the industry—as it did here. Because both individuals refused to testify, FINRA was unable to fully investigate the underlying conduct involving penny stock services and disclosure obligations.For investors, this case is a reminder that FINRA's ability to investigate potential misconduct depends on the cooperation of registered persons. When individuals refuse to participate in examinations, FINRA's only recourse is a permanent bar, which at least ensures that those individuals cannot continue to work in the securities industry. Investors with accounts at firms where a broker has been barred should review their account history and contact the firm's compliance department with any concerns. FINRA BrokerCheck is a free resource that can be used to check the regulatory history of any registered broker or firm.

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