Oppenheimer Continues to Bleed From Regulatory Investigations

Currently, Oppenheimer has set aside over $12 million in funds earmarked to resolve various regulatory investigations ongoing by the Securities and Exchange Commission (“SEC”), Financial Industry Regulatory Authority (“FINRA”), and the U.S. Treasury Department.  These investigations primarily revolve around a number of Oppenheimer’s financial advisors, particularly in the private client group, and their sales practices in penny stocks.  According to FINRA, a handful of Oppenheimer brokers fraudulently traded over 1 billion shares of penny stocks, which are defined as stocks trading at less than $5 per share.  Oppenheimer already paid FINRA $1.4 million to settle this issue, but there are at least two ongoing SEC investigations concerning the same conduct.

Similarly, regulators have also begun investigations on Oppenheimer’s sales practices in the sales of leveraged and inverse exchange traded funds (ETFs).  An exchange traded fund is an actively managed investment company, similar to a mutual fund.  However, instead of investors buying and selling shares directly from the fund, as they do with a mutual fund, ETF investors purchase shares from each other on the secondary market.  Leveraged and inverse ETFs come with additional and substantial risks that many investors do not really understand.  As such, they can lead to substantial losses in investor accounts when not properly advised by brokers and other investment professionals.

Additionally, the U.S. Treasury Department has begun investigating Oppenheimer for potential violations of the Bank Secrecy Act, which includes a number of anti-money-laundering requirements for brokerage firms like Oppenheimer.  The SEC is also looking at potential supervisory failures at Oppenheimer for its failure to detect and prevent numerous insider trades placed by an Oppenheimer employee.

If you are an investor who lost money at Oppenheimer through penny stocks or exchange traded funds that you purchased at the recommendation of your broker, contact us for a free, no obligation consultation to evaluate whether you may have a claim to attempt to recover some or all of your losses.

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