Caldwell International Securities Corporation Censured by FINRA and Must Pay $2 Million

Soreide Law Group obtained the following information from FINRA’s website under, “Disciplinary and Other FINRA Actions, October 2016.”
Caldwell International Securities Corporation (CRD #104323, Nassau, Bahamas), Greg Allen Caldwell (CRD #2816295, Austin, Texas) and Paul Joseph Jacobs (CRD #4658235, Austin, Texas)

The firm was censured, fined $1,000,000, and required to pay $1,026,089.48 in restitution to clients. Greg Caldwell was assessed a deferred fine of $50,000 and barred by FINRA. Paul Jacobs was suspended by FINRA for six months.
Allegedly, Caldwell International Securities Corporation, through one or more of its principals, including Caldwell and Jacobs, failed to develop, maintain and enforce a supervisory system, including written supervisory procedures (WSPs), allowing many of its registered representatives to recommend an unsuitable active trading investment strategy that the representatives did not understand and which caused significant financial losses to clients while generating substantial profits for the firm, Caldwell, Jacobs and others.
FINRA’s findings stated that representatives were allowed to engage in trading with discretion without authorization, and trading that exceeded the benchmarks for excessive trading and churning without any meaningful supervision.
Principals Caldwell and Jacobs were responsible for supervising one or more of these registered representatives. Greg Caldwell and Paul Jacobs were each allegedly aware of the high level of trading in client accounts. Caldwell and Jacobs did not take meaningful steps to supervise the high level of trading activity, nor did they adequately monitor for excessive trading or churning other than to review each trade at the firm in isolation on a daily basis. Once the alleged excessive trading and churning was identified, Caldwell and Jacobs did not adequately respond to investigate or stop this misconduct.
Caldwell International Securities Corporation is liable for the unsuitable recommendations of the active trading investment strategy made by its representatives.
FINRA’s findings also stated that Caldwell International Securities Corporation failed to ensure that several of the registered representatives were placed on heightened supervision in compliance with the firm’s WSPs, failed to ensure that electronic correspondence at branches was being reviewed in compliance with the firm’s WSPs, and as a result, failed to report client complaints, and failed to offer clients mutual fund right of reinvestment/reinstatement waived or reduced sales charges, resulting in clients being overcharged $107,367.08.
FINRA’s findings also included that the firm, through Caldwell and Jacobs, failed to establish, maintain and enforce a system, including WSPs, reasonably designed to supervise active and aggressive trading, detect and prevent churning, excessive trading and unsuitable active trading investment strategy recommendations.
FINRA found that Caldwell International Securities Corporation’s supervisory deficiencies also led to the firm charging clients misleading and/or discriminatory miscellaneous fees in transactions.
Jacobs’ suspension is in effect from September 6, 2016, through March 5, 2017.
(FINRA Case #2014039091903)
If you were a client of Caldwell International Securities Corporation and/or brokers, Greg Caldwell and Paul Jacobs, and experienced investment losses due to their actions or recommendations, call Soreide Law Group at no cost to you and speak to a lawyer regarding the possibility of recovering your investment losses at: 888-760-6552.