Palm Beach Gardens Firm, GWN Securities Inc., Fined and Censured by FINRA

Soreide Law Group, based in Pompano Beach, Florida, obtained the following information from FINRA’s April 2018 Disciplinary Report on the Florida firm: 
GWN Securities Inc. (CRD #128929, Palm Beach Gardens, Florida)
FINRA censured the firm, fined them $100,000, ordered them to pay $72,715.82, plus interest, in restitution to clients, and required GWN Securities to submit a written certification indicating that it has reviewed and revised its Written Supervisory Procedures (WSPs) to ensure that clients receive sales charge discounts on all eligible unit investment trust (UIT) purchases, to monitor short-term trading in UITs and to implement procedures to identify and to monitor high rates of variable annuity exchanges by individual registered representatives, in order to achieve compliance with FINRA rules.
Without admitting or denying the findings, GWN Securities allegedly consented to the sanctions and to the entry of findings that it failed to identify and apply sales charge discounts to certain clients with eligible UIT purchases resulting in clients paying excessive sales charges of $72,715.82.
FINRA’s findings stated that allegedly many of GWN Securities’ UIT sales with missed discounts involved rollovers. Their findings also stated that the firm failed to establish, maintain and enforce a supervisory system and WSPs reasonably designed to ensure clients received sales charge discounts on all eligible UIT purchases and to monitor short-term trading in UITs.
FINRA stated that while the firm’s WSPs addressed UITs, they did not provide guidance on the proper calculation and application of sales charge discounts for UIT purchases and did not include any language specific to rollover discounts. Additionally, across approximately 50 accounts, at least one firm representative recommended short-term trading of UITs to his clients, resulting in an average holding period of 205 days.
FINRA’s findings also included that GWN Securities allegedly failed to establish and maintain a supervisory system and failed to establish, maintain and enforce WSPs reasonably designed to identify and determine if any of their representatives had inappropriate rates of variable annuity exchanges. GWN Securities had numerous representatives with high percentages of variable annuity exchanges to their overall variable annuity transactions. Yet, the firm manually reviewed variable annuity exchanges as part of its suitability review of variable annuity transactions and conducted only a one-month lookback of variable annuity transactions.
GWN Securities’ WSPs failed to document the one-month lookback process.
The firm failed to track any trend analysis or have any surveillance report that would have identified high rates of exchanges by individual representatives and had no system or procedures to maintain historic information about rates of variable annuity exchanges.
(FINRA Case #2016047566601)
If you were/are a client of GWN Securities Inc. of Palm Beach Gardens, Florida, and experienced losses due to their recommendations or actions, call Soreide Law Group, conveniently located in Pompano Beach, Florida, and speak to an experienced securities lawyer regarding the possible recovery of your investment losses through a FINRA arbitration at:  888-760-6552.
Soreide Law Group represents clients nationwide before FINRA.  We operate on a contingency fee basis—no fee to you if no recovery.