Brokerage Firm Review: Avantax Investment Services, Inc.

Avantax Investment Services, Inc. (“Avantax Investment Services”) (CRD#13686) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Avantax Investment Services, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.

If you believe you have a claim against Avantax Investment Services, you should strongly consider hiring an investment fraud lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Can I Sue Avantax Investment Services?

If you’ve lost money caused by Avantax Investment Services and/or its employees’ misconduct then the answer is, YES, you can sue Avantax Investment Services, but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Avantax Investment Services in FINRA arbitration proceedings but WIN that arbitration. The easiest way to know if you have a viable case against Avantax Investment Services is to call Attorney Pearce at our office at 800-732-2889.

Investment Losses? We Can Help

Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.

Get A Free Consultation

or, give us a ring at (800) 732-2889.

What is Avantax Investment Services?

Avantax Investment Services (CRD#13686) is a registered broker-dealer. It operates as a full-service independent broker-dealer, providing a range of financial products and services to individual investors and financial advisors.

As a registered broker-dealer, Avantax Investment Servicesis subject to regulations and oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is required to comply with industry standards and regulations to ensure the protection of its clients’ interests.

A failure to comply with industry standards by either its brokers or the firm itself can result in disciplinary actions, fines, or other penalties imposed by regulatory authorities.

Avantax Investment Services Has Many Different Regulatory Problems 

Avantax Investment Services rapid growth has not been without consequences. There have been approximately 16 state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against Avantax Investment Servicesfor misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record. 

We have reported and written about these regulatory problems and customer complaints over many years. Avantax Investment Services is a repeat offender: there are 16 FINRA-reported proceedings citing the firm with one form of supervisory lapses or another.

A Brief Overview of Some of the Regulatory Problems Avantax Investment Services Has Faced Over the Years*

Avantax Investment Services has been repeatedly censured, warned, and fined multi-millions of dollars for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:

SEC Fines, Censures, and Orders Avantax Investment Services to Cease and Desist for Failure to Supervise Advisor’s Misappropriations

Brief Overview: According to the SEC, the firm failed to supervise former registered representative Lewis Hunter to prevent and detect his misappropriation of funds in violation of section 17(a} of the Act of 1933 and section 10(b) of the Act and Rule 10(b)-5 thereunder; failed to make a reserve formula calculation and bank account deposit under rule 15c3-3 when it determined it owed money to customers due to representatives’ actions; and failed to preserve emails in violation of certain books and records provisions.

NASD Censures and Fines Avantax Over $4 million for Rule Violations

Brief Overview: The NASD found rule violations in connection with alleged acceptance of directed brokerage in connection with mutual fund sales (NASD Rule 2830{k}; unequal weighting of securities in sales contests; and violations of recordkeeping and supervisory requirements in connection with non-cash compensation.

NASD Censures and Fines Avantax for Mutual Fund Sales Practices

Brief Overview: The NASD found that the member firm sold shares issued by mutual funds without providing certain customers with breakpoint discounts described in the prospectuses of the fund. The NASD also found that the firm failed to give its customers breakpoint discounts in 33.39% of eligible mutual fund transactions in 2001 and 2002 that resulted in missed breakpoints that would have reduced customers’ charges by at least $725,217 on their purchases of mutual fund shares with front-end loads during the relevant period.

FINRA Censures and Fines Avantax for Overcharging Customers by Approximately $219,930 for Mutual Fund Purchases

Brief Overview:  Without admitting or denying the findings, the firm consented to the sanctions and to the entry of FINRA findings that it disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. The findings stated that these eligible customers were instead sold Class A shares with a front-end sales charge or Class B or C Shares with back-end sales charges and higher ongoing fees and expenses. These sales disadvantaged eligible customers by causing such customers to pay higher fees than they were required to pay. The findings also stated that the firm failed to reasonably supervise the application of sales-charge waivers to eligible mutual fund sales. The firm relied on its financial advisors to determine the applicability of sales-charge waivers but failed to maintain adequate written policies or procedures to assist financial advisors in making this determination. In addition, the firm failed to adequately notify and train its financial advisors regarding the availability of mutual fund sales charge waivers for eligible customers. The firm also failed to adopt adequate controls to detect instances in which they did not provide sales-charge waivers to eligible customers in connection with their mutual fund purchases.

Why Does Avantax Investment Services Have So Many Regulatory Problems And Customer Complaints?

Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.

The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers. 

Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.

These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.

Did Avantax Investment Services Advisor Misconduct Cause You Investment Losses?

When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Avantax Investment Services is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Avantax Investment Services without representation with an attorney about their complaints and have their complaints denied.

Related Read: Can You Sue Your Brokerage Firm?

Investment Losses? We Can Help

Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.

Get A Free Consultation

or, give us a ring at (800) 732-2889.

Consult With An Attorney Who Recovers Investment Losses Caused By Avantax Investment Services Today!

The investment loss attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Avantax Investment Services cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.

Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $170 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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