Janney Montgomery Scott, LLC (“Janney Montgomery Scott”) (CRD# 463) has faced numerous complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors. The firm’s repeated supervisory failures and regulatory violations have resulted in substantial losses for investors across the country.
If Janney Montgomery Scott or its financial advisors caused you to lose money through fraud, negligence, or breach of fiduciary duty, you have legal options to recover your losses. Most investors will pursue their claims through FINRA arbitration rather than traditional court litigation because arbitration agreements typically require this dispute resolution method.
At the Law Offices of Robert Wayne Pearce, we have extensively investigated Janney Montgomery Scott’s regulatory history and customer complaints. We have successfully represented investors with claims against this organization and its advisors, securing significant recoveries for victims of investment misconduct.
Do not wait to take action. Strict time limits apply to filing investment fraud claims. Contact us for a free consultation to discuss your case and explore your legal options.
Can I Sue Janney Montgomery Scott?
Yes, you can sue Janney Montgomery Scott if the firm or its employees’ misconduct caused you to lose money. However, the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding.
FINRA arbitration is a formal legal proceeding where investors present their claims before neutral arbitrators who have the authority to award damages. It is not simply filing a complaint—it is a binding dispute resolution process that can result in substantial monetary awards for defrauded investors.
While arbitration replaces courtroom litigation, it provides the same opportunity to present evidence, cross-examine witnesses, and obtain a legally enforceable decision. Many investors successfully recover significant losses through FINRA arbitration when represented by experienced securities attorneys.
How to Sue Janney Montgomery Scott for Investment Losses
What Can I Do If I Lost Money at Janney Montgomery Scott?
If you lost money at Janney Montgomery Scott due to advisor misconduct, you can file a FINRA arbitration claim to recover your losses. FINRA arbitration is the legal process most investors must use because brokerage agreements typically require disputes to be resolved through arbitration rather than court lawsuits.
The process begins by filing a Statement of Claim with FINRA, which outlines the misconduct that caused your losses. This document details the fraudulent activities, unsuitable recommendations, unauthorized trading, or supervisory failures that harmed your investments. Your claim will reference the specific regulatory violations documented in Janney Montgomery Scott’s disciplinary history.
Janney Montgomery Scott’s 53 regulatory disclosure events demonstrate a pattern of supervisory failures that likely contributed to your losses. The firm’s history of market timing violations, away-from-market transactions, and auction rate securities misconduct shows systemic compliance problems. These documented failures provide strong evidence that the firm failed to properly supervise its representatives or protect investor interests.
Even if you signed an arbitration agreement when opening your account, you retain the right to pursue claims for losses caused by fraud or negligence. The arbitration process allows you to present evidence, call witnesses, and obtain a binding decision that can award full compensation for your losses, including lost principal, lost profits, and potentially punitive damages.
Who Can Help Me Sue Janney Montgomery Scott?
Securities arbitration requires specialized legal knowledge because the cases involve complex financial products, industry regulations, and FINRA procedures. An experienced investment fraud attorney understands how to build claims based on Janney Montgomery Scott’s specific regulatory violations and can connect those documented failures to the losses in your account.
Our firm has handled numerous cases against Janney Montgomery Scott and similar independent broker-dealers with systemic supervisory problems. We know how to identify the supervisory failures, unsuitable recommendations, and fraudulent activities that characterize these cases. This experience is critical because FINRA arbitration moves quickly and requires attorneys who understand both securities law and the arbitration forum itself.
What is Janney Montgomery Scott?
Janney Montgomery Scott (CRD# 463) 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, Janney Montgomery Scott 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.
Why Does Janney Montgomery Scott Have So Many Bad Reviews and Customer Complaints?
Independent broker-dealers like Janney Montgomery Scott frequently struggle with supervision because their business model prioritizes rapid expansion over investor protection. These firms operate like franchises, opening many small offices nationwide to generate steady revenues without the costs of full-service branch offices that have on-site managers and compliance officers.
The representatives at these firms typically run their own separate businesses. They are not employees of the broker-dealer, which means the firm has limited control over their daily activities. These representatives structure their operations to maximize their own profits, often treating investor protection as a low priority.
Supervision occurs through remote Offices of Supervisory Jurisdiction (OSJs), where other independent contractors monitor representatives from geographically distant offices. These OSJ managers are not full-time supervisors—they run their own businesses and cannot closely monitor the day-to-day operations of the representatives they are supposed to oversee.
This creates dangerous gaps in supervision. There is often no immediate review of new accounts, securities transactions, or client correspondence. No one is onsite to catch forged signatures on documents or detect when representatives place inaccurate information about clients’ financial situations to justify unsuitable investment recommendations. Many offices receive only one compliance audit per year, leaving investors vulnerable to ongoing misconduct.
The North American Securities Administrators Association (NASAA) has documented more instances of sales abuse and investor losses at independent broker-dealers than at traditional brokerage firms with on-site managers. This structural problem explains why firms like Janney Montgomery Scott accumulate so many regulatory violations and customer complaints over time.
Janney Montgomery Scott Has Many Different Regulatory Problems
Janney Montgomery Scott’s rapid growth has not been without consequences. There have been approximately 53 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) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against Janney Montgomery Scott 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. Janney Montgomery Scott is a repeat offender: there are over 53 FINRA-reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.
A Brief Overview of Some of the Regulatory Problems Janney Montgomery Scott Has Faced Over the Years*
Janney Montgomery Scott 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:
Janney Montgomery Scott Fined $1.2M for Market Timing Violations
Brief Overview: In 2005, FINRA fined Janney Montgomery Scott $1.2 million for improper market timing and related violations. The firm allowed hedge fund customers to evade mutual fund companies’ restrictions on market timing transactions, resulting in approximately $1 million in profits for the hedge funds. Janney Montgomery Scott was aware of the market timing activities but failed to establish adequate supervision to prevent deceptive practices. Kenneth Rosato, the former branch manager, was suspended for one year and fined $370,000, while Linda Rosato, the former branch operations manager, was barred for refusing to testify in FINRA’s investigation.
Janney Montgomery Scott Fined $2.5M for Away-from-market Stock Loan Transactions
Brief Overview: In 2007, NYSE Regulation fined Janney Montgomery Scott LLC $2.5 million for engaging in away-from-market stock loan transactions and making payments to finders who provided no legitimate business function. The stock loan department diverted portions of the “spread” to other firms and purported finders, depriving the original lender of proceeds. The firm paid approximately $1.4 million to finders without written agreements or evidence of services rendered. Janney Montgomery Scott failed to reasonably supervise its stock loan department and settled the matter by recording telephone conversations and retaining the recordings for one year.
Auction Rate Securities
Brief Overview: In 2009, FINRA entered into final settlements with four firms, including Janney Montgomery Scott, to settle charges relating to the sale of Auction Rate Securities (ARS) that became illiquid when auctions froze in February 2008. Janney Montgomery Scott was fined $200,000 and agreed to initiate or complete offers to repurchase auction rate securities sold to customers where the auctions for the securities had failed.
*Above are only some of the regulatory disciplinary actions filed against Janney Montgomery Scott by FINRA. NASSA and other state securities regulator investigations and enforcement actions account for another 53 BrokerCheck disclosures.
Did Janney Montgomery Scott 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. Janney Montgomery Scott 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 Janney Montgomery Scott without representation with an attorney about their complaints and have their complaints denied.
Related Read: Can You Sue Your Brokerage Firm?
Consult With An Attorney Who Recovers Investment Losses Caused By Janney Montgomery Scott Today
The investment loss attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 45 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Janney Montgomery Scott 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.
