Equity Services, Inc. (“Equity Services”) (CRD# 265) 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 Equity 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 Equity 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 Equity Services, Inc.?
If you’ve lost money caused by Equity Services and/or its employees’ misconduct then the answer is, YES, you can sue Equity 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 Equity Services in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Equity 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.
or, give us a ring at (800) 732-2889.
What is Equity Services, Inc.?
Equity Services (CRD# 265) has been registered with the SEC and FINRA as a broker dealer since 1969. The company is controlled by the National Life Insurance Corporation and headquartered in Montpelier, Vermont with small branch offices located throughout the United States. 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 600 registered representatives in every state. It is now one of the 50 largest independent broker-dealer and investment advisory firms in the United States.
Equity Services, Inc. Has Many Different Regulatory Problems
Equity Services’ rapid growth has not been without consequences. There have been approximately 8 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 Equity Services 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. Equity Services is a repeat offender: there are at least 4 FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another in the last decade.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS EQUITY SERVICES, INC. HAS FACED OVER THE YEARS*
Equity Services 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 SEC and FINRA sanctions for its supervisory failures are below:
SEC Sanctions Equity Services And Orders It To Pay Investors Over $587,000
The SEC investigated Equity Services and discovered multiple breaches of fiduciary duty and inadequate disclosures by the registered investment adviser in connection with its mutual fund share class selection practices and the fees it received pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”). It found that Equity Services 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. Equity Services received 12b-1 fees in connection with these investments. Equity Services 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, Equity Services received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes. As a result, the SEC ordered Equity Services to cease-and-desist from any further violations of the Advisors Act, censured the advisory firm, and ordered it to pay over $587,000 in disgorgement and prejudgment interest to investors.
FINRA Sanctions Equity Services For ESI Supervisory Failures
FINRA investigated and discovered that Equity Services failed to establish and maintain a supervisory system and establish, maintain and enforce written supervisory procedures related to the electronic storage of information and reasonably designed to achieve compliance with the requirements of FINRA rules and the federal securities laws. This conduct violated NASD Conduct Rules 2110 and 3010 and FINRA Rule 2010 for which Equity Services was censured and fined $20,000.
FINRA Sanctions Equity Services For Not Enforcing Its Supervisory Procedures
FINRA investigated and discovered that one of Equity Services financial advisors made unsuitable sales of an unregistered private placement to five retail investors. Further, FINRA found Equity Services failed to enforce its written supervisory procedures relating to suitability and the sale of private placements. It concluded that this conduct violated NASD Conduct Rules 2310, 3010 and 2110 and IM-2310-2 and imposed a censure and $50,000 fine upon Equity Services and ordered the brokerage firm to pay over $163,000 in restitution plus interest to the customers.
FINRA Sanctions Equity Services For Multiple Supervisory Lapses
In the course of another FINRA investigation, it found that Equity Services failed to properly supervise non-cash compensation provided to its associated persons. Further, Equity Services supervisory system and written policies and procedures did not adequately ensure compliance with NASD Conduct Rules 2820 and 2830 relating to the payment or reimbursement of non-cash compensation.
In addition, during the relevant period, FINRA found Equity Services failed to properly preserve e-mail from its home office. Moreover, FINRA found the brokerage also failed to properly journal e-mail for custodians in the Salt Lake City OSJ. As a result of these e-mail retention problems, ESI violated NASD Conduct Rules 3110 and 2110 and SEC Rule17a-4.
As a result of the foregoing violations, FINRA sanctioned Equity Services by issuing a censure and a fine of $350,000.
*Above are only some of the regulatory disciplinary actions filed against Equity Services by FINRA. There are at least 4 more SEC, FINRA, NASSA, and/or state securities regulator investigations and enforcement actions reported on BrokerCheck as regulatory disciplinary proceeding disclosures.
Equity Services, Inc. Customer Complaints
There have been hundreds of complaints filed against Equity Services stockbrokers and investment advisors over the years. We have launched numerous investigations of current and former Equity Services advisors, including:
If you have lost money investing with any of these Equity Services 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 Equity Services, Inc. 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 Equity Services, Inc. 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. Equity 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 Equity 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.
or, give us a ring at (800) 732-2889.
Consult With An Attorney Who Recovers Investment Losses Caused By Equity Services, Inc. Today!
The securities 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 Equity 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.
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