Is Your Firm Supervising Charges for Financial Plans?

July 01, 2005

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The New Jersey Attorney General just announced a $5 million settlement to be paid by an investment advisor/broker-dealer for failing to supervise its representative.

The underlying wrongdoing apparently involved a rep forging client signatures on financial planning agreements and then mutual fund redemption forms in order to pay for fictional financial plans.

According to the consent order, the victims included an apartment manager (in her 60s earning $44,000 per year with $25,000 of assets at the advisory firm) that paid $11,000 for 6 financial plans during a two year time period. On the other end of the spectrum, there was a recent college graduate earning $24,000 annually with $35,000 of assets held at the advisory firm that was charged $8,000 for 4 financial plans in a two year period.

This unfortunate incident confirms again the need for invstment advisor firms to adopt and enforce thorough supervisory procedures related to preparation of financial plans and charging of financial planning fees.

Posted by Bryan Hill
Labels: Enforcement