FINRA Fines Newbridge Securities $125,000 for AML Failures and Unsuitable Recommendations

Posted on October 3rd, 2024 at 8:40 AM
FINRA Fines Newbridge Securities $125,000 for AML Failures and Unsuitable Recommendations

From the desk of Jim Eccleston at Eccleston Law

Newbridge Securities Corporation has been fined $125,000 and censured by the Financial Industry Regulatory Authority (FINRA) for inadequate anti-money laundering (AML) protocols and for unsuitable recommendations of complex investment products. In addition to the fine, the firm has been ordered to pay over $43,000 in restitution to affected customers, according to the DI Wire.

FINRA found that from June 2019 to July 2020, Newbridge failed to meet AML requirements when handling accounts for customers referred by a China-based issuer. The firm allowed numerous accounts to open without proper verification of customer identities, violating AML protocols.

Additionally, FINRA determined that between January 2015 and November 2019, Newbridge made unsuitable recommendations for customers with low or moderate risk tolerance to purchase Variable Rate Structured Products (VRSPs). These complex products initially offer a high “teaser” interest rate before shifting to a floating rate, posing significant risks to customers, particularly those with conservative investment goals. In some cases, Newbridge concentrated customer accounts in VRSPs, with positions exceeding 25% of their liquid net worth, exposing them to potential principal loss and little to no interest over extended periods.

These violations of FINRA rules, including Rule 3310 (AML compliance) and Rule 2111 (suitability of recommendations), led to the imposed sanctions. Without admitting or denying the findings, Newbridge consented to the fine and censure.

The DI Wire previously reported that Newbridge has faced several other regulatory actions. In September 2019, the firm was fined $225,000 for failing to properly supervise sales of complex securities. Additionally, in March 2023, Newbridge was fined $50,000 and ordered to pay over $114,000 in restitution for inadequate supervision of alternative mutual funds.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

Return to Archive

TESTIMONIALS

Previous
Next

Thank You from the bottom of our hearts for all you have done for us. When we realized this was a very bad investment - we did not know where to turn for help. Then we received your name. When we called you - you were so kind to us and then agreed to help us. For this we are so very grateful. The world would be a much nicer place if there were more people like the two of you in it. We will always remember all the help and kindness you have shown us. Thank you so very very much for everything.

Wayne and Judy S.

LATEST NEWS AND ARTICLES

April 1, 2025
CFP Board Releases AI Ethics Guide for Its Certificants

The CFP Board has released a "Generative AI Ethics Guide" to address the growing use of artificial intelligence in financial advising.

April 1, 2025
BrokerCheck Report: Examining Customer Disputes Against Centaurus Financial, Inc. Broker Troy N. Tremblay

Troy N. Tremblay (CRD #4625407) of Centaurus Financial, Inc. (doing business as Tremblay Financial Services), has or has had three customer disputes, according to his BrokerCheck report.

April 1, 2025
A Look at Regulatory Events and Customer Allegations Against Stifel, Nicolaus & Company Inc. Broker Chuck A. Roberts

Chuck A. Roberts (CRD #2064602), currently registered with Stifel, Nicolaus & Company Incorporated, has or has had two regulatory events and twenty-five customer disputes over the course of his career in the financial services industry.