Dougherty & Company LLC Fined, Censured and Ordered to Pay Restitution to Elderly Client

Soreide Law Group (888-760-6552) obtained the following information on FINRA’s website under, “Disciplinary and Other FINRA Actions January 2017.”

Dougherty & Company LLC (CRD #7477, Minneapolis, Minnesota)
was censured, fined $140,000 and required to pay $78,910 in restitution to an elderly client for allegedly, more than four years, not adequately supervising a representative who initiated hundreds of trades for two elderly clients without contacting them, and unsuitably recommended dozens of transactions to those clients.
According to a FINRA report, from 2010 until June of 2014, one of Dougherty’s top producers, allegedly initiated trades for two elderly clients without contacting them on hundreds of occasions.  This representative recommended unsuitable trading strategies--short term trading in municipal and corporate bonds, and unsuitable use of margin--to the elderly clients on dozens of occasions.
FINRA’s findings stated that Dougherty & Company assigned the primary responsibility for supervising the representative’s trading activity to a supervisor who was also responsible for supervising numerous other representatives and handling his own clients’ accounts. The supervisor’s supervision of the representative was not subject to adequate oversight or specific direction from the firm. Instead, Dougherty & Company relied on the supervisor’s discretion and judgment, which he did not exercise appropriately.
Also, FINRA’s findings stated that Dougherty & Company did not have supervisory resources that were reasonably designed to detect the representative’s misconduct. While the supervisor received daily trade blotters and certain monthly exception reports, the firm did not provide exception reports addressing short-term trading or margin usage to the supervisor.
Dougherty & Company’s exception reports addressing trading by elderly clients excluded accounts in the name of a trust, regardless of the age of the settlor or trustee, meaning that the representative’s trading activity in two of the accounts at issue did not appear on those exception reports. The findings also included that Dougherty & Company failed to respond appropriately to warning signs about the representative’s business, such as a dramatic increase in his commissions without a commensurate change in the number of accounts that he handled or the type of products that he sold.
According to FINRA, Dougherty & Company’s system of supervision was not reasonably designed under the circumstances to prevent violations of securities laws and rules, including rules governing trading without customers’ approval and unsuitable recommendations.
(FINRA Case #2015047008701)
If you or an elderly family member have experienced losses due to Dougherty & Company’s actions or recommendations, call Soreide Law Group and speak to a lawyer at no cost regarding the possible recovery of your investments at:  888-760-6552.
Soreide Law Group represents our clients nationwide before FINRA.  We operate on a contingency fee basis.