Citizens Securities, Inc. (“Citizens Securities”) (CRD#39550) 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 Citizens Securities, 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 Citizens Securities, 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 Citizens Securities?
If you’ve lost money caused by Citizens Securities and/or its employees’ misconduct then the answer is, YES, you can sue Citizens Securities, 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 Citizens Securities in FINRA arbitration proceedings but WIN that arbitration. The easiest way to know if you have a viable case against Citizens Securities 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.
or, give us a ring at (800) 732-2889.
What is Citizens Securities?
Citizens Securities (CRD#39550) 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, Citizens Securities is 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.
Citizens Securities Has Many Different Regulatory Problems
Citizens Securities’ 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 customer complaints filed against Citizens Securitiesfor 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. Citizens Securities is a repeat offender: there are over 16 FINRA-reported proceedings citing the firm with one form of supervisory lapses or another.
A Brief Overview of Some of the Regulatory Problems Citizens Securities Has Faced Over the Years*
Citizens Securities 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:
FINRA Censures and Fines Citizens Securities for Disadvantaging Customers Eligible to Purchase Lower Cost Mutual Fund Shares
Brief Overview: Without admitting or denying the findings, Citizen Securities consented to the sanctions and to the entry of FINRA findings that it disadvantaged certain customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. FINRA stated that some of the mutual funds available on the firm’s retail platform offered such waivers, which were disclosed in their prospectuses. Still, the firm failed to apply the waivers to mutual fund purchases made by eligible customers and instead sold them 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. Such sales disadvantaged eligible customers by causing such customers to pay higher fees than they were required to pay. FINRA also stated that the firm failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales, relying on its financial advisors to determine the applicability of sales charge waivers but failed to adequately notify and train its financial advisors regarding the availability of mutual fund sales charge waivers for eligible customers. As a result, the firm was censured and fined $50,000.
FINRA Censures and Fines Citizens Securities for Failure to Timely Disclose Customer Complaints and Settlements
Brief Overview: Without admitting or denying the findings, Citizens Securities consented to the sanctions and to the entry of FINRA findings that it failed to timely disclose 45 customer complaints and settlements on its associated persons’ Forms U4 and U5. FINRA stated that in addition, 22 individuals associated with the firm reported disclosable events, such as outside business activities or bankruptcies, on their annual compliance questionnaires, but the firm did not timely amend their Forms U4. FINRA further stated that the firm failed to implement an adequate supervisory system to ensure that the firm reported customer complaints and settlements on associated persons’ Forms U4 and U5. Indeed, the individuals at the firm who were responsible for reviewing customer complaints were not adequately trained about the criteria that required the firm to report customer complaints on associated persons’ Forms U4 and U5. As a result, the firm was censured and fined $300,000.
State of New Hampshire Securities Department Fines Citizens Securities for Unsuitable Variable Annuity Sales
Brief Overview: The State of New Hampshire securities department initiated an investigation into Citizens Securities and alleged that the firm’s compliance department failed to adequately monitor for potential sales abuses and suitability issues with respect to variable annuity sales to customers aged 75 years and over. According to the Department, some of the sales were liquidations, transfers, or exchanges of a security to purchase a variable annuity. In addition, the department found the firm failed to adequately retain e-mail communications as is required by broker-dealer rules and regulations. The firm agreed to conduct audits related to the issues described above and was fined $375,000.
NASD Fines Citizens Securities for Failure to Comply with NASD Rules and Federal Securities Laws Concerning Customer Suitability
Brief Overview: Without admitting or denying the findings, Citizens Securities consented to the described sanctions and to the entry of NASD findings that the firm failed to establish, maintain, and enforce a supervisory system and written procedures designed to achieve compliance with NASD rules and federal securities laws and regulations relating to customer suitability reviews, telemarketing, internal inspections, pre-registration web CRD searches, review of written correspondence, registration of offices, and review and approval of fund-direct 529 plan business. As a part of its agreement with the NASD, the firm was required to review its firm resources to assess its adequacy and make written recommendations to comply with applicable laws and rules and certify to the NASD that it has completed its review and revised its supervisory system and written procedures. As a result, the firm was censured and fined $850,000.
Rhode Island Division of Securities Fines Citizens Securities for Failure to Supervise Variable Annuity Sales
Brief Overview: The Rhode Island Division of Securities initiated an investigation into Citizens Securities which revealed violations of the Rhode Island Uniform Securities Act in connection with the sale of variable annuities and a failure to supervise such activity. The division further found violations of recordkeeping requirements, including requirements regarding the maintenance and preservation of email, and violations of applicable regulatory requirements regarding gifts and gratuities. The firm agreed to provide written confirmation to the division that it completed its offer to allow all Rhode Island customers who purchased a variable annuity during the applicable time-period and were 75 years of age or older at the time of purchase to redeem their annuity at the current value without incurring surrender charges. As a result, the firm was fined $800,000.
*Above are only some of the regulatory disciplinary actions filed against Citizens Securities by FINRA. NASAA and other state securities regulator investigations and enforcement actions account for another 11 BrokerCheck disclosures.
Citizens Securities Customer Complaints
There have been scores of customer complaints filed against Citizens Securities stockbrokers and investment advisors over the years. We have launched many investigations of current and former Citizens Securities advisors:
If you have lost money investing with any of these Citizens Securities advisors or others within this brokerage firm, it’s important that you reach out to an investment loss attorney quickly because the statutes of limitations can bar your claims. Call us at 800-732-2889.
Why Does Citizens Securities Have So Many Regulatory Problems And Customer Complaints?
Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of many 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 Citizens Securities 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. Citizens Securities 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 Citizens Securities 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.
or, give us a ring at (800) 732-2889.
Consult With An Attorney Who Recovers Investment Losses Caused By Citizens Securities 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 Citizens Securities 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.
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