Brokerage Firm Review: Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC

Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC (“Equitable Advisors”) (CRD#:6627) 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 Equitable Advisors, 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 Equitable Advisors, 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 Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC?

If you’ve lost money caused by Equitable Advisors and/or its employees’ misconduct then the answer is, YES,  you can sue Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC 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 Equitable Advisors in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Equitable Advisors 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 Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC?

Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC (“Equitable Advisors”) (CRD#:6627) is the latest iteration of a 160 year old French insurance company’s broker-dealer and investment advisory operations which began its operations in the states in 1973 as AXA Equitable Advisors, LLC. The company is controlled by Equitable Life with its United States headquarters located in New York City.  Its independent broker-dealer Business Model has grown through acquisition and organic development of primarily one and two person registered representative offices supervised remotely. Today there are over 4,300 registered representatives in every state. In January 2020, the parent and its subsidiaries decided to rebrand the company as “Equitable” with the symbol of Greek goddess, “Athena” to give public investors a false sense of security that they are dealing with a fair, wise, and strong company.

Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC has Many Different Regulatory Problems 

There have been approximately 25 Federal, 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 Equitable Advisors for 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. Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC is a repeat offender with many, SEC, FINRA, and state securities regulator reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.

A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS EQUITABLE ADVISORS, LLC f/k/a AXA EQUITABLE ADVISORS, LLC HAS FACED OVER THE YEARS*

Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC has been repeatedly censured, warned, and fined 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 Censures And Orders AXA Equitable Advisors To Pay Investors Over $1.1 Million

The SEC found AXA Equitable Advisors breached its  fiduciary duty and made inadequate disclosures in connection with its mutual fund share class selection practices and the fees it and its associated persons received pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”). During the Relevant Period, AXA Equitable Advisors purchased, recommended, or held for advisory clients mutual fund share classes that charged 12b-1 fees instead of lower-cost share classes of the same funds for which the clients were eligible. AXA Equitable Advisors and its associated persons received 12b-1 fees in connection with these investments. AXA Equitable Advisors failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, AXA Equitable Advisors and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes.

The SEC concluded from the conduct described above,  AXA Equitable Advisors willfully violated Section 206(2) of the Advisers Act, which makes it unlawful for any investment adviser, directly or indirectly, to “engage in any transaction, practice or course of business which operates as a fraud or deceit upon any client or prospective client. Further, that AXA Equitable Advisors willfully violated Section 207 of the Advisers Act, which makes it “unlawful for any person willfully to make any untrue statement of a material fact in any registration application or report filed with the Commission . . . or willfully to omit to state in any such application or report any material fact which is required to be stated therein.”

As a result, the SEC censured and ordered AXA Equitable Advisors to pay disgorgement and pre-judgement interest $1,134,152 to the affected investors.

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AXA Equitable Advisors Sanctioned For Misrepresenting 401K Plan Investments And Misleading Investors

FINRA investigated and found AXA Equitable Advisors distributed documents that negligently misrepresented the credit quality of certain bond funds offered within group annuity contracts for 401(k) retirement plans. Specifically, certain documents it distributed misrepresented that certain bond funds were “investment-grade” when, in fact, they were not. Based on the foregoing, AXA Equitable Advisors violated FINRA Rule 2010. In addition, other documents created by its affiliated life insurance company that contained misleading information, AXA Equitable Advisors also violated NASD Rule 2210(d)(1)(B) and FINRA Rules 2210(d)(1)(B) and 2010. FINRA also found  Equitable Advisors failed to establish, maintain, and enforce a supervisory system and written supervisory procedures (“WSPs”) reasonably designed to achieve compliance with FINRA Rule 2010 or with the content standards of FINRA Rule 2210, in that AXA Equitable Advisors did not have supervisory systems or WSPs reasonably designed to determine whether the documents created by its affiliated life insurance company that were distributed to plan sponsors and participants contained accurate descriptions of the credit quality of the bond funds it sold.

Based on the foregoing, AXA Equitable Advisors violated NASD Rule 3010 and FINRA Rules 3110 and 2010 and censured; fined $600,000; and ordered to pay restitution to the plan participants in the total amount of $172,461.33.

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AXA Equitable Advisors Sanctioned For Cheating Charities Out Of Sales Charge Waivers

FINRA investigated and found AXA Equitable Advisors disadvantaged certain retirement plan and charitable organization customers who were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge (”Eligible Customers”). 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. During this period, AXA Equitable Advisors relied on another FINRA member firm to execute its customers’ trades in mutual funds and to monitor and administer the trade orders placed by its registered representatives. Consequently, AXA Equitable Advisors failed to establish and maintain its own supervisory system and procedures reasonably designed to ensure that Eligible Customers who purchased mutual fund shares received the benefit of applicable sales charge waivers. As a result, the AXA Equitable Advisors violated NASD Conduct Rule 3010 and FINRA Rules 3110 and 2010.

FINRA censured AXA Equitable Advisors and ordered it to pay over $600,000 in restitution to certain customers.

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AXA Equitable Advisors Censured And Fined For Supervisory Failures

FINRA investigated and found AXA Equitable Advisors failed reasonably to supervise a registered representative associated with the firm who misappropriated approximately $122,000 from a customer account. AXA Equitable Advisors had placed the employee on heightened supervision when he registered with the firm but according to FINRA failed to conduct a meaningful review of his activities in connection with this customer account and, as a result, failed to reasonably supervise him. FINRA concluded AXA Equitable Advisors thereby violated NASD Rule 3010 and, as a result of those violations, also violated FINRA Rule 2010 and NASD Rule 2110.

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SEC Censures And Penalizes AXA Equitable Advisors For Failure To Detect And Prevent Misappropriation Of Its Customers Assets

Respondent failed reasonably to supervise Leo T. Buggy (“Buggy”) with a view to preventing and detecting his violations of the federal securities laws. During the relevant time period, Buggy fraudulently induced customers to redeem securities held at AXA Equitable Advisors, including variable annuities and mutual funds, under the false representation that the proceeds from such redemptions would be invested in other securities through AXA Equitable Advisors. Instead, Buggy caused customers to place those funds in a bank account controlled by Buggy, from which he misappropriated the funds.

AXA Equitable Advisors failed to implement adequate procedures regarding the review of redemptions by customers of variable annuities. During the relevant period, AXA Equitable Advisors had procedures in place requiring supervisory review of securities transactions but did not have in place adequate procedures for the review of redemptions of variable annuities which occurred in the accounts of Buggy’s customers. Buggy had customers partially redeem their variable annuities and then reinvest the funds in his “Leo T. Buggy – Equitable Life Agency” personal account. Had AXA Equitable Advisors implemented adequate procedures for supervisory review of redemptions from the variable annuities of Buggy’s customers, Buggy’s conduct likely would have been detected and prevented.

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AXA Equitable Advisors Censured And Fined For Ignoring “Red Flags” Of Ponzi Scheme

Kenneth Neely was a former registered representative working at the AXA Equitable Advisors Clayton, Missouri branch office. While at the AXA Equitable Advisors, Neely allegedly engaged in a Ponzi scheme whereby he induced customers of the Firm and others to participate in a fictitious “St. Louis Investment Club” and to invest in an equally fictitious real estate investment trust, the “St. Charles REIT.” FINRA barred Neely from associating with a member firm. In the course of its investigation of Neely, FINRA discovered that  in April 2008, the AXA Equitable Advisors became aware of red flags relating to Neely’s activities, including a spreadsheet reflecting a payment plan for individuals who Neely had induced to participate in his fictitious investment, together with Neely’s improbable explanation for the spreadsheet. FINRA concluded AXA Equitable Advisors failed to respond adequately to these red flags, thus violating NASD Rules 3010 and 2110.

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AXA Equitable Advisors Sanctioned For CapAdvantage Account Supervisory Lapses

AXA Equitable Advisors offered its customers a fee-based brokerage account called CapAdvantage. Rather than paying a commission on every trade made in the account, customers paid an annual fee based on the total value of assets in the account. A FINRA investigation revealed AXA Equitable Advisors failed to establish and maintain a supervisory system reasonably designed to review and monitor its fee-based brokerage business, in violation of NASD Conduct Rules 3010 and 2110. Neither AXA Equitable Advisors practices in supervising accounts, nor its written procedures for CapAdvantage accounts were adequate. As a result of these deficiencies in AXA Equitable Advisors supervisory system and procedures, it allowed customers to open and continue in CapAdvantage accounts even if the accounts were inappropriate for the investors in light of the fee-in-lieu of commission structure, the $1,000 minimum annual fee, or the required $50,000 minimum in assets. AXA Equitable Advisors collected CapAdvantage fees from accounts after the accounts went a full year with no transactions, imposed fees even if the account stayed below the minimum asset level for a year, and charged asset-based fees for CapAdvantage accounts before the accounts ever reached the minimum value that was supposed to trigger the asset-based fee. In addition, during the review period, AXA Equitable Advisors used written internal and external communications that were misleading, in violation of NASD Conduct Rules 2210, 2211 and 2110.

As a result of the foregoing conduct, AXA Equitable Advisors was censured; fined $ 1.2 million; and ordered by FINRA to make payment of restitution in the total amount of $1,391,427 plus interest.

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FINRA Censured And Fined AXA Equitable Advisors $900,000 For Unlawful Shelf Space (Revenue Sharing) Programs

FINRA investigated and found AXA Equitable Advisors maintained two shelf space (or revenue sharing) programs under which a number of participating mutual fund complexes paid a fee in return for preferential treatment, which included enhanced access to the firm’s sales force, placement of sales materials on the firm’s internal website, and promotion of the funds’ shares by the firm on a broader basis than was available for other funds. During the Relevant Period, five of the fund complexes that participated in Respondent’s shelf space program paid their fees, in whole or in part, by directing approximately $3 million in brokerage commissions to Respondent.  

FINRA found AXA Equitable Advisors violated NASD Rule 2830(k), which prohibits member firms from favoring or disfavoring the sale or distribution of mutual fund shares on the basis of brokerage commissions received by the firm, and prohibits member firms from recommending the purchase of mutual fund shares on the basis of brokerage commissions received or expected to be received by the firm from any source. AXA Equitable Advisors receipt of these commission payments also violated NASD Conduct Rule 2110.

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FINRA Sanctioned AXA Equitable Advisors For Cheating Investors Out Of NAV Transfer Program Sales Charge Waivers

FINRA investigated and found AXA Equitable Advisors failed to provide opportunities to purchase Class A shares of certain mutual funds at net asset value (“NAV”) by numerous investors. These mutual funds offered “NAV Transfer Programs” that allowed investors to purchase Class A shares at NAV and not pay any sales charges, if the customer invested proceeds from the redemption of shares of another mutual fund and previously had paid either a front-end or back-end sales charge.

AXA’s Investment Products Group (the “Products Group”) failed to exercise reasonable due diligence to identify essential terms and conditions of NAV Transfer Programs of certain mutual fund offerings, with the result that investors who were eligible to purchase Class A shares under the NAV Transfer Programs (1) purchased Class A shares and incurred front-end sales charges that they should not have paid, and/or (2) purchased Class B shares of these mutual funds, even though they qualified to purchase the Class A shares under the NAV Transfer Program. These investors became subject to contingent deferred sales charges (“CDSCs”), as well as the higher ongoing distribution and service fees (“Rule 12b-l fees” or “fees”) associated with the Class B shares.

FINRA found The Products Group, however, did not have adequate systems or procedures in place to identify and determine the availability of NAV Transfer Programs. In fact, the Products Group, whose responsibilities included conducting due diligence of all third-party mutual funds sold by the firm, did not have any written procedures regarding the functions for which the Products Group was responsible.

As a result, FINRA concluded AXA Equitable Advisors violated NASD Conduct Rules 2110, 2310 and 3010 and censured, fined, and order restitution to the affected investors.

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Why Does Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC 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 Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC Advisor Misconduct Cause You Investment Losses?

When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the 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. Equitable Advisors 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 Equitable Advisors 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 Equitable Advisors, LLC f/k/a AXA Equitable Advisors, LLC Today!

The securities lawyers 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 Equitable Advisors 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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