Lincoln Financial Advisors Corp, headquartered in Fort Wayne, Indiana, agreed to a censure and $90,000 fine by FINRA relating to allegations that it failed to adequately supervise a broker who was engaged in unsuitable penny stock trading.
According to the Letter of Acceptance, Waiver and Consent (“AWC”) with FINRA, Lincoln Financial “had written supervisory procedures that prohibited solicited penny stock transactions by firm representatives. Notwithstanding this prohibition . . . [a broker] placed over 1,700 penny stock orders in connection with at least 15 customers, which he marked unsolicited but many of which appear to have been solicited. With respect to four customers, [the broker] recommended penny stock transactions that were unsuitable because they led to overconcentration of penny stocks in the customers’ accounts, and were contrary to their stated investment objectives.” The unsuitable trading occurred from approximately January 2010 through September 2011, according to the AWC.
Lincoln Financial terminated the broker in October 2011, and the firm subsequently paid approximately $616,109 in settlements relating to 15 complaints it received from September 2011 through October 2012, according to the AWC.
The FINRA disciplinary action is No. 2011029739902.
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