Brokerage Firm Review: NYLIFE Securities LLC

NYLIFE Securities LLC (“NYLIFE Securities”) (CRD#5167) 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 NYLIFE 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 NYLIFE 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 NYLIFE Securities?

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

Get A Free Consultation

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

What is NYLIFE Securities?

NYLIFE Securities (CRD#5167) 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, NYLIFE 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.

NYLIFE Securities Has Many Different Regulatory Problems 

NYLIFE Securities’ rapid growth has not been without consequences. There have been approximately 13 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 NYLIFE 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. NYLIFE Securities is a repeat offender: there are over 13 FINRA-reported proceedings citing the firm with one form of supervisory lapses or another.

A Brief Overview of Some of the Regulatory Problems NYLIFE Securities Has Faced Over the Years*

NYLIFE 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 NYLIFE Securities for Faulty Unsuitable Mutual Fund Switch Surveillance System

Brief Overview: Without admitting or denying the findings, NYLIFE Securities consented to the sanctions and to the entry of FINRA findings that it failed to establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with FINRA suitability requirements as it pertains to mutual fund and cross-product switches. FINRA stated that the firm’s supervisory system and procedures were not reasonably designed or enforced to detect and prevent unsuitable mutual fund switching. The firm monitored for mutual fund switches on a weekly basis, identifying transactions that it deemed “letterable,” then sent letters to customers that disclosed the mutual fund purchase and sale at issue. However, the letters did not disclose the sales charges incurred on either transaction. FINRA also found firm did not have written supervisory procedures or adequately train supervisors on how to determine whether the clients benefitted from the mutual fund switch transactions or whether the transactions were suitable. As a result of the findings, the firm was censured and fined $200,000.

NYLIFE Securities Censured and Fined by FINRA for Failure to Supervise Unsuitable High-Risk Mutual Fund Concentration

Brief Overview: Without admitting or denying the findings, NYLIFE Securities consented to the sanctions and to the entry of FINRA findings that it failed to enforce its written procedures for supervising the suitability of sales of higher-risk mutual funds that were subject to significant volatility. FINRA stated that according to those procedures, when such sales resulted in customer portfolios that were over concentrated in higher risk securities, the firm’s registered persons were required to work with customers to reallocate the portfolios or determine how to change their risk tolerances and investment objectives to correspond with their assumption of additional risk. However, the firm adjusted customers’ risk tolerances and investment objectives to accommodate sales of higher-risk mutual funds without first seeking the customers’ input. Those unilateral adjustments permitted numerous customers to over-concentrate their portfolios in higher-risk mutual funds, leading to losses totaling $1.4 million. The firm paid restitution totaling $1.1 million, and the firm was censured and fined $250,000 pursuant to the consent agreement with FINRA.

State of Maine Office of Securities Fines NYLIFE Securities for Failure to Detect Representative’s Emails Confessing to Theft

Brief Overview: The Maine Office of Securities alleged that NYLIFE’s email surveillance systems were inadequate based on its failure to detect that a former registered representative was using his firm email address to communicate about his unauthorized taking of funds from a local fraternal organization that was not a NYLIFE client.  According to the Office of Securities, a licensed agent of NYLIFE securities used his work email address to confess over the course of several emails to stealing money from a fraternal organization for which he served as treasurer by writing checks to himself. The firm’s lexicon-based email surveillance system did not flag any of the emails. So the office of Securities found the firm failed to establish, maintain, and enforce a system of supervisory controls reasonably designed to monitor its agents’ electronic correspondence. As a result, the firm was fined $50,000.

State of Indiana Secretary of State Securities Division Fines NYLIFE Securities for Registered Representatives Outside Business Activity

Brief Overview: NYLIFE Securities entered into a consent agreement with the Indiana Secretary of State Securities Division based on an investigation into certain illegal outside business activities carried out by former registered representative. Although the consent agreement does not constitute a finding or determination against NYLIFE Securities of any violation of the Indiana Uniform Securities Act or an admission of misconduct or violations of law. NYLIFE Securities Agreed to pay a civil penalty of $200,000 and reimburse the State of Indiana for investigative costs of $50,000.

NASD Fines NYLIFE Securities for Disadvantaging Customers in terms of Mutual Fund Breakpoints

Brief Overview:  The NASD initiated an investigation and found that the firm recommended to clients that they purchase Class B mutual fund shares through its registered representatives. However, the firm did not consider on a consistent basis that an equal investment in Class A shares would generally have been more advantageous for certain clients. Specifically, the firm did not consistently consider that large investments in Class A shares of mutual funds entitled clients to breakpoint discounts on sales charges which is not available for investment in Class B shares. The NASD also found that the firm’s supervisory and compliance policies and procedures during the review period were not reasonably established, maintained, or enforced so that the firm provided the benefits of various mutual fund share classes as they applied to individual clients. As a result, the firm was fined $354,000.

Why Does NYLIFE 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 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 NYLIFE 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. NYLIFE 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 NYLIFE 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.

Get A Free Consultation

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

Consult With An Attorney Who Recovers Investment Losses Caused By NYLIFE 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 NYLIFE 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.

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.

Rate this Post

Loading...