FINRA Fines Firm for Inadequate Supervision of Sales of Reverse Convertibles
The Financial Industry Regulatory Authority (FINRA) announced on October 20, 2010 that it had fined Ferris, Baker Watts, LLC, acquired by RBC Wealth Management, $500,000 for inadequate supervision of sales of reverse convertible notes to retail customers as well as unsuitable sales of reverse convertibles to 57 accounts by elderly customers who were at least 85 years old and customers of modest net worth. They were also ordered to pay nearly $190,000 in restitution.
According to the news release, FINRA discovered that during the period January 2006 to July 2008, Ferris, Baker engaged in sales of reverse convertibles to 2,000 retail accounts without providing sufficient guidance to its brokers and supervising managers on how to assess suitability in connection with their broker’s recommendations of reverse convertibles. Additionally, the firm did not have in place a system to adequately monitor customer accounts for overconcentration in reverse convertibles.
If you have suffered losses due to reverse convertibles, please contact our securities law firm for a confidential, no obligation consultation at 1-800-259-9010.