KESTRA INVESTMENT SERVICES, LLC · KESTRA INVESTMENT SERVICES, LLC CRD# 42046 SEC# 8-49672 Main Office Location 5707 SOUTHWEST PARKWAY BUILDING 2, SUITE 400 AUSTIN, TX 78735 Regulated

BrokerCheck Report

KESTRA INVESTMENT SERVICES, LLC

Section Title

Report Summary

Firm History

CRD# 42046

1

11

Firm Profile 2 - 10

Page(s)

Firm Operations 12 - 21

Disclosure Events 22

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KESTRA INVESTMENT SERVICES,LLC

CRD# 42046

SEC# 8-49672

Main Office Location

5707 SOUTHWEST PARKWAYBUILDING 2, SUITE 400AUSTIN, TX 78735Regulated by FINRA Dallas Office

Mailing Address

5707 SOUTHWEST PARKWAYBUILDING 2, SUITE 400AUSTIN, TX 78735

This firm is a brokerage firm and an investmentadviser firm. For more information aboutinvestment adviser firms, visit the SEC'sInvestment Adviser Public Disclosure website at:

Business Telephone Number

844-553-7872

https://www.adviserinfo.sec.gov

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 14

Arbitration 2

Firm Profile

This firm is classified as a limited liability company.

This firm was formed in Texas on 09/01/2014.

Its fiscal year ends in December.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 14 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm has referral or financial arrangements withother brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 53 U.S. states and territories

www.finra.org/brokercheck User Guidance

1©2020 FINRA. All rights reserved. Report about KESTRA INVESTMENT SERVICES, LLC

https://adviserinfo.sec.gov/firm/summary/42046


http://www.finra.org/brokercheck

http://www.finra.org/brokercheck_reports


This firm is classified as a limited liability company.

This firm was formed in Texas on 09/01/2014.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in December.

KESTRA INVESTMENT SERVICES, LLC

SEC#

42046

8-49672

Main Office Location

Mailing Address

Business Telephone Number

Doing business as KESTRA INVESTMENT SERVICES, LLC

844-553-7872

Regulated by FINRA Dallas Office








This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

KESTRA FINANCIAL, INC

SOLE MEMBER

75% or more

No

Domestic Entity

10/2014

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


BENNETT, JOEL VAN

CHIEF FINANCIAL OFFICER

Less than 5%

No

Individual

08/2016

Yes

2047878



Position


Position Start Date

CHESTER, KRISTEN LAWLESS

CHIEF OPERATING OFFICER, EXECUTIVE VICE PRESIDENT

Less than 5%

Individual

08/2018

6896952








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


PEDLOW, MICHAEL ROSS

CHIEF COMPLIANCE OFFICER, EXECUTIVE VICE PRESIDENT

Less than 5%

No

Individual

04/2015

Yes

4871563



Position



Position Start Date


POER, JAMES LYNN

CHIEF EXECUTIVE OFFICER, PRESIDENT

Less than 5%

No

Individual

07/2008

Yes

1983357



SCHOENBECK, MARK PAUL

2625829








Firm Profile

Position



Position Start Date


EXECUTIVE VICE PRESIDENT

Less than 5%

No

Individual

01/2016

Yes

2625829


Position



Position Start Date


VANDERHEYDEN, JOHN PATRICK

EXECUTIVE VICE PRESIDENT

Less than 5%

No

Individual

01/2009

Yes

2235802



Position


Position Start Date


YIN, YIN

CONTROLLER

Less than 5%

Individual

09/2007

No

3219513









Firm Profile



No

No






This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

KESTRA ADVISOR SERVICES HOLDINGS A, INC

OWNER

KESTRA ADVISOR SERVICES HOLDINGS B, INC

75% or more

No

Domestic Entity

06/2014

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established




KESTRA ADVISOR SERVICES HOLDINGS B, INC

OWNER

KESTRA ADVISOR SERVICES HOLDINGS C, INC

75% or more

No

Domestic Entity

06/2014

Yes









KESTRA ADVISOR SERVICES HOLDINGS C, INC


Domestic Entity









Indirect Owners (continued)

Firm Profile

OWNER


75% or more

No

06/2014

Yes







KINGFISHER HOLDING A, INC.

OWNER

KINGFISHER HOLDING B, INC.

75% or more

No

Domestic Entity

06/2019

Yes









KINGFISHER HOLDING B, INC.

OWNER

KESTRA ADVISOR SERVICES HOLDINGS A, INC.

75% or more

Domestic Entity

04/2019






Percentage of Ownership8©2020 FINRA. All rights reserved. Report about KESTRA INVESTMENT SERVICES, LLC






Firm Profile

75% or more

No

Yes




KINGFISHER HOLDING, L.P.

OWNER

KINGFISHER HOLDING A, INC.

75% or more

No

Domestic Entity

06/2019

Yes









WARBURG PINCUS FINANCIAL SECTOR, L.P.

LIMITED PARTNER

KINGFISHER HOLDING, L.P.

25% but less than 50%

No

Domestic Entity

06/2019

Yes















Firm Profile

NoIs this a public reportingcompany?






Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

No information reported.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 1 SRO and 53 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

Yes

No

No

Federal Regulator Status Date Effective

SEC Approved 03/07/1997

Self-Regulatory Organization Status Date Effective

FINRA Approved 03/07/1997






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 04/24/1997

Alaska Approved 07/23/1998

Arizona Approved 03/18/1997

Arkansas Approved 04/29/1997

California Approved 03/14/1997

Colorado Approved 03/27/1997

Connecticut Approved 04/11/1997

Delaware Approved 03/18/1997

District of Columbia Approved 05/11/1997

Florida Approved 04/02/1997

Georgia Approved 03/27/1997

Hawaii Approved 08/08/1997

Idaho Approved 03/17/1997

Illinois Approved 04/03/1997

Indiana Approved 03/26/1997

Iowa Approved 03/27/1997

Kansas Approved 05/01/1997

Kentucky Approved 04/21/1997

Louisiana Approved 04/07/1997

Maine Approved 07/16/1997

Maryland Approved 03/28/1997

Massachusetts Approved 03/25/1997

Michigan Approved 04/28/1997

Minnesota Approved 04/11/1997

Mississippi Approved 04/11/1997

Missouri Approved 06/26/1997

Montana Approved 06/25/1997

Nebraska Approved 04/18/1997

Nevada Approved 03/12/1997

New Hampshire Approved 05/20/1997

New Jersey Approved 04/23/1997

New Mexico Approved 04/28/1997

New York Approved 04/01/1997

U.S. States &Territories

Status Date Effective

North Carolina Approved 03/17/1997

North Dakota Approved 08/11/1997

Ohio Approved 05/15/1997

Oklahoma Approved 03/24/1997

Oregon Approved 04/04/1997

Pennsylvania Approved 04/16/1997

Puerto Rico Approved 06/08/2001

Rhode Island Approved 03/20/1997

South Carolina Approved 03/21/1997

South Dakota Approved 04/04/1997

Tennessee Approved 05/16/1997

Texas Approved 01/24/1997

Utah Approved 03/25/1997

Vermont Approved 05/05/1997

Virgin Islands Approved 06/14/2005

Virginia Approved 04/22/1997

Washington Approved 03/20/1997

West Virginia Approved 04/14/1997

Wisconsin Approved 04/09/1997

Wyoming Approved 07/28/1997






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does not effect transactions in commodities, commodity futures, or commodity options.This firm does engage in other non-securities business.

Non-Securities Business Description: KESTRA INVESTMENT SERVICES LLC IS ALSO AN INSURANCELICENSED FIRM.

This firm currently conducts 14 types of businesses.

Types of Business

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Mutual fund retailer

U S. government securities broker

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Broker or dealer selling oil and gas interests

Put and call broker or dealer or option writer

Investment advisory services

Broker or dealer selling tax shelters or limited partnerships in primary distributions

Non-exchange member arranging for transactions in listed securities by exchange member

Private placements of securities

Broker or dealer involved in a networking, kiosk or similar arrangment with a: bank, savings bank or association, orcredit union

Broker or dealer involved in a networking, kiosk or similar arrangment with a: insurance company or agency






Firm Operations

Clearing Arrangements

This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does refer or introduce customers to other brokers and dealers.

Name: NATIONAL FINANCIAL SERVICES LLC

Business Address: 260 FRANKLIN ST.SUITE L7BBOSTON, MA 02110

CRD #: 13041

Effective Date: 01/21/1999

Description: KESTRA INVESTMENT SERVICES, LLC HAS A FULLY DISCLOSED "PRIMARY CORRESPONDENT" RELATIONSHIP WITH NATIONALFINANCIAL SERVICES, LLC ("NFSC") AS CLEARING FIRM.






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

This firm does have accounts, funds, or securities maintained by a third party.

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

Control Persons/Financing

Name: CITIES DIGITAL

Business Address: 2000 O'NEIL ROADSUITE 150HUDSON, WI 54016


Description: ELECTRONIC DATA IMAGING (LASERFICHE) ARRANGEMENT FORBOOKS AND RECORDS DESIGNED TO COMPLY WITH APPLICABLERULES AND REGULATIONS REQUIRING THAT ELECTRONIC DATA BESTORED IN A MEDIUM THAT CANNOT BE ALTERED



CRD #: 13041





CRD #: 13041








Firm Operations

Industry Arrangements (continued)

This firm does not have individuals who wholly or partly finance the firm's business.






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

Yes

No

No

11/13/2019

43 MAIN STREET SESUITE 236MINNEAPOLIS, MN 55414

152667

VECTOR WEALTH MANAGEMENT is under common control with the firm.

AFFILIATED THROUGH COMMON CONTROL ENTITY KESTRA FINANCIAL,INC."

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

07/01/2019

9930 JOHNNYCAKE RIDGE ROADSUITE 2BCONCORD, OH 44060

167955

HICKORY ASSET MANAGEMENT, INC. is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations

Organization Affiliates (continued)


Description:

Yes

Yes

No

12/01/2017

6600 ROCKLEDGE DRIVE6TH FLOORBETHESDA, MD 20817

1763

H. BECK, INC. is under common control with the firm.

DIRECTLY OWNED BY, OR INDIRECTLY UNDER COMMON CONTROL WITH,KESTRA FINANCIAL INC, THE PARENT COMPANY OF APPLICANT

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

04/04/2016


283330

KESTRA ADVISORY SERVICES, LLC is under common control with the firm.

THE APPLICANT AND THE RIA ARE UNDER COMMON CONTROL WITHDIRECT PARENT COMPANY, KESTRA FINANCIAL INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

3570 MOUNT CARMEL RD.SUITE 150SAN DIEGO, CA 92130

155193

KESTRA PRIVATE WEALTH SERVICES, LLC is under common control with the firm.

Business Address:

CRD #:






Firm Operations


Yes

No

No

03/10/2014

3570 MOUNT CARMEL RD.SUITE 150SAN DIEGO, CA 92130


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

No

No

07/01/2009

5707 SOUTHWEST PARKWAYBLDG 2 SUITE 400AUSTIN, TX 78735

151790

KESTRA INSTITUTIONAL SERVICES, LLC is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

01/10/2002

611 DRUID RD, STE 105CLEARWATER, FL 33756

105375

PROVISE MANAGEMENT GROUP, LLC is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


Yes


Description:


Yes

No

No

01/01/2000

17300 PRESTON RDSUITE 120EDALLAS, TX 75252

110038

BEACON FINANCIAL GROUP is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 14 0

Arbitration N/A 2 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 14

Reporting Source: Regulator

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT CAUSEDCERTAIN RECRUITED REGISTERED REPRESENTATIVES TO TAKENONPUBLIC PERSONAL CUSTOMER INFORMATION FROM THE BROKER-DEALER FIRMS WHERE THEY WERE THEN REGISTERED AND TO DISCLOSEIT TO A THIRD-PARTY VENDOR THAT ASSISTED THE REPRESENTATIVESWITH THEIR TRANSITION TO THE FIRM, WITHOUT THE OTHER BROKER-DEALERS' OR THE CUSTOMERS' KNOWLEDGE OR CONSENT, CAUSINGTHOSE BROKER-DEALERS TO VIOLATE THE SEC'S REGULATION S-P:PRIVACY OF CONSUMER FINANCIAL INFORMATION AND SAFEGUARDINGINFORMATION. THE FINDINGS STATED THAT THE FIRM CONTRACTED ANDWORKED WITH THE VENDOR TO CREATE A TEMPLATE SPREADSHEET TOCOLLECT INFORMATION ABOUT THE RECRUITED REPRESENTATIVES'CUSTOMERS, INCLUDING THEIR NONPUBLIC PERSONAL INFORMATION.THE SPREADSHEET CONTAINED FIELDS FOR, AMONG OTHER ITEMS,CUSTOMERS' SOCIAL SECURITY NUMBERS, DRIVER'S LICENSE NUMBERS,AND BIRTH DATES, AS WELL AS FIELDS PERTAINING TO THEIR FINANCIALPOSITION. IN CERTAIN INSTANCES, FIRM EMPLOYEES WORKED WITHRECRUITED REPRESENTATIVES TO COMPLETE THE SPREADSHEET WHILETHEY WERE STILL REGISTERED THROUGH THEIR PRIOR BROKER-DEALERS. FIRM EMPLOYEES, HOWEVER, DID NOT RECEIVE COPIES OFTHE SPREADSHEET OR HAVE ACCESS TO THE NONPUBLIC PERSONALINFORMATION PROVIDED TO THE VENDOR. ONCE A RECRUITEDREPRESENTATIVE BECAME REGISTERED THROUGH THE FIRM, THEVENDOR USED THE SPREADSHEET TO AUTOMATICALLY PRE-POPULATENEW ACCOUNT FORMS THAT THE VENDOR SENT TO CUSTOMERS WHOAGREED TO OPEN ACCOUNTS WITH THE FIRM. THE FIRM TYPICALLYREIMBURSED RECRUITED REPRESENTATIVES FOR THE FEES CHARGEDTO THEM BY THE VENDOR TO GENERATE THE FIRM'S NEW ACCOUNTDOCUMENTS. THE FIRM FAILED TO TAKE ANY STEPS TO INQUIREWHETHER THE RECRUITED REPRESENTATIVES OR THEIR BROKER-DEALERS AT THE TIME HAD NOTIFIED CUSTOMERS ABOUT THEDISCLOSURE OF THEIR NONPUBLIC PERSONAL INFORMATION, NOR ANYSTEPS TO INQUIRE AS TO WHETHER CUSTOMERS HAD BEEN GIVEN ANOPPORTUNITY TO OPT-OUT OF HAVING THEIR INFORMATION DISCLOSED.THE FIRM ALSO FAILED TO PROVIDE ANY GUIDANCE TO THE RECRUITEDREPRESENTATIVES CONCERNING THE DISCLOSURE OF CUSTOMERS'NONPUBLIC PERSONAL INFORMATION TO THE VENDOR.

Current Status: Final






Initiated By: FINRA

Date Initiated: 04/28/2020

Docket/Case Number: 2018060228201

Principal Product Type: No Product

Other Product Type(s):

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT CAUSEDCERTAIN RECRUITED REGISTERED REPRESENTATIVES TO TAKENONPUBLIC PERSONAL CUSTOMER INFORMATION FROM THE BROKER-DEALER FIRMS WHERE THEY WERE THEN REGISTERED AND TO DISCLOSEIT TO A THIRD-PARTY VENDOR THAT ASSISTED THE REPRESENTATIVESWITH THEIR TRANSITION TO THE FIRM, WITHOUT THE OTHER BROKER-DEALERS' OR THE CUSTOMERS' KNOWLEDGE OR CONSENT, CAUSINGTHOSE BROKER-DEALERS TO VIOLATE THE SEC'S REGULATION S-P:PRIVACY OF CONSUMER FINANCIAL INFORMATION AND SAFEGUARDINGINFORMATION. THE FINDINGS STATED THAT THE FIRM CONTRACTED ANDWORKED WITH THE VENDOR TO CREATE A TEMPLATE SPREADSHEET TOCOLLECT INFORMATION ABOUT THE RECRUITED REPRESENTATIVES'CUSTOMERS, INCLUDING THEIR NONPUBLIC PERSONAL INFORMATION.THE SPREADSHEET CONTAINED FIELDS FOR, AMONG OTHER ITEMS,CUSTOMERS' SOCIAL SECURITY NUMBERS, DRIVER'S LICENSE NUMBERS,AND BIRTH DATES, AS WELL AS FIELDS PERTAINING TO THEIR FINANCIALPOSITION. IN CERTAIN INSTANCES, FIRM EMPLOYEES WORKED WITHRECRUITED REPRESENTATIVES TO COMPLETE THE SPREADSHEET WHILETHEY WERE STILL REGISTERED THROUGH THEIR PRIOR BROKER-DEALERS. FIRM EMPLOYEES, HOWEVER, DID NOT RECEIVE COPIES OFTHE SPREADSHEET OR HAVE ACCESS TO THE NONPUBLIC PERSONALINFORMATION PROVIDED TO THE VENDOR. ONCE A RECRUITEDREPRESENTATIVE BECAME REGISTERED THROUGH THE FIRM, THEVENDOR USED THE SPREADSHEET TO AUTOMATICALLY PRE-POPULATENEW ACCOUNT FORMS THAT THE VENDOR SENT TO CUSTOMERS WHOAGREED TO OPEN ACCOUNTS WITH THE FIRM. THE FIRM TYPICALLYREIMBURSED RECRUITED REPRESENTATIVES FOR THE FEES CHARGEDTO THEM BY THE VENDOR TO GENERATE THE FIRM'S NEW ACCOUNTDOCUMENTS. THE FIRM FAILED TO TAKE ANY STEPS TO INQUIREWHETHER THE RECRUITED REPRESENTATIVES OR THEIR BROKER-DEALERS AT THE TIME HAD NOTIFIED CUSTOMERS ABOUT THEDISCLOSURE OF THEIR NONPUBLIC PERSONAL INFORMATION, NOR ANYSTEPS TO INQUIRE AS TO WHETHER CUSTOMERS HAD BEEN GIVEN ANOPPORTUNITY TO OPT-OUT OF HAVING THEIR INFORMATION DISCLOSED.THE FIRM ALSO FAILED TO PROVIDE ANY GUIDANCE TO THE RECRUITEDREPRESENTATIVES CONCERNING THE DISCLOSURE OF CUSTOMERS'NONPUBLIC PERSONAL INFORMATION TO THE VENDOR.





https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2018060228201


Principal Sanction(s)/ReliefSought:

Other Sanction(s)/ReliefSought:


Resolution Date: 04/28/2020

Resolution:

Other Sanctions Ordered:

Sanction Details: THE FIRM WAS CENSURED AND FINED $125,000. FINES PAID IN FULL ONMAY 5, 2020.

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Sanctions Ordered: CensureMonetary/Fine $125,000.00

Acceptance, Waiver & Consent(AWC)

iReporting Source: Firm

Initiated By: FINRA


Censure





Allegations: WITHOUT ADMITTING OR DENYING THE UNDERLYING ALLEGATIONS, THEFIRM CONSENTED TO THE ENTRY OF FINDINGS THAT IT VIOLATED FINRARULE 2010 BY CAUSING RECRUITED REPRESENTATIVES TO TAKENONPUBLIC CUSTOMER INFORMATION FROM THEIR PRIOR BROKER-DEALER AND DISCLOSE IT TO A THIRD PARTY VENDOR THAT ASSISTEDTHE REPRESENTATIVES WITH THEIR TRANSITION TO THE FIRM WITHOUTTHE PRIOR BROKER-DEALER'S OR CUSTOMERS' KNOWLEDGE ORCONSENT, CAUSING THOSE BROKER-DEALERS TO VIOLATE SECREGULATION S-P.









Censure


FINE $125,000


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $125,000.



Disclosure 2 of 14

i


Initiated By: PENNSYLVANIA DEPARTMENT OF BANKING AND SECURITIES; CONTACT ISJOHN CHIAPPETTA, ATTORNEY 412-565-3646


Civil and Administrative Penalt(ies) /Fine(s)




URL for Regulatory Action:

Principal Product Type: Other


Allegations: FAILED TO REASONABLY SUPERVISE ONE AGENT IN CONNECTION WITHHIS SALES OF STRUCTURED PRODUCTS TO CERTAIN OF HIS CLIENTS INPA.



Resolution:


No

Other







Sanction Details: ADMINISTRATIVE ASSESSMENT DUE WITHIN 30 DAYS OF THE EFFECTIVEDATE OF THE ORDER.

Regulator Statement MATTER WAS RESOLVED BY CONSENT AGREEMENT ORDER (CAO).


No

Sanctions Ordered: Monetary/Fine $30,000.00


Initiated By: PENNSYLVANIA DEPARTMENT OF BANKING AND SECURITIES





Docket/Case Number: 19-0039

Principal Product Type: Options

Other Product Type(s): REAL ESTATE INVESTMENT TRUSTS

Allegations: ALLEGED FAILURE FROM APRIL 2009 TO MARCH 2010 TO MAINTAIN AREASONABLE SYSTEM FOR APPLYING AND ENFORCING WRITTENPROCEDURES PERTAINING TO THE SALE OF REAL ESTATE INVESTMENTTRUSTS BY ONE REPRESENTATIVE IN PENNSYLVANIA.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGED VIOLATION, KESTRAINVESTMENT SERVICES, LLC ("KESTRA IS") AGREED TO THE ENTRY OF ACONSENT AGREEMENT AND ORDER WITH THE COMMONWEALTH OFPENNSYLVANIA PURSUANT TO WHICH KESTRA IS PAID A FINE OF $30,000


Consent






WITHOUT ADMITTING OR DENYING THE ALLEGED VIOLATION, KESTRAINVESTMENT SERVICES, LLC ("KESTRA IS") AGREED TO THE ENTRY OF ACONSENT AGREEMENT AND ORDER WITH THE COMMONWEALTH OFPENNSYLVANIA PURSUANT TO WHICH KESTRA IS PAID A FINE OF $30,000

Firm Statement ON APRIL 2, 2019, WITHOUT ADMITTING OR DENYING THE ALLEGEDVIOLATION, KESTRA INVESTMENT SERVICES, LLC ("KESTRA IS") AGREEDTO THE ENTRY OF A CONSENT AGREEMENT AND ORDER WITH THECOMMONWEALTH OF PENNSYLVANIA PURSUANT TO WHICH KESTRA ISPAID A FINE OF $30,000 IN CONNECTION WITH THE COMPANY'S ALLEGEDFAILURE FROM APRIL 2009 TO MARCH 2010 TO MAINTAIN A REASONABLESYSTEM FOR APPLYING AND ENFORCING WRITTEN PROCEDURESPERTAINING TO THE SALE OF REAL ESTATE INVESTMENT TRUSTS BY ONEREPRESENTATIVE IN PENNSYLVANIA.

Disclosure 3 of 14

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE, OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE APPLICATION OF SALES CHARGE WAIVERS AND SHARECLASS DETERMINATIONS FOR ELIGIBLE MUTUAL FUND SALES. THE FIRMRELIED ON ITS FINANCIAL ADVISORS TO DETERMINE THE APPLICABILITYOF SALES CHARGE WAIVERS, BUT FAILED TO MAINTAIN REASONABLYDESIGNED WRITTEN POLICIES OR PROCEDURES TO ASSIST FINANCIALADVISORS IN MAKING THIS DETERMINATION. FOR INSTANCE, THE FIRMFAILED TO ESTABLISH AND MAINTAIN WRITTEN PROCEDURES TOIDENTIFY APPLICABLE SALES CHARGE WAIVERS IN FUND PROSPECTUSESFOR ELIGIBLE CUSTOMERS. IN ADDITION, THE FIRM FAILED TOADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORS REGARDINGTHE AVAILABILITY OF MUTUAL FUND SALES-CHARGE WAIVERS FORELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ESTABLISHREASONABLY DESIGNED CONTROLS TO DETECT INSTANCES IN WHICHTHEY DID NOT PROVIDE SALES CHARGE WAIVERS TO ELIGIBLECUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. ASA RESULT OF THE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGEWAIVERS, THE FIRM OVERCHARGED ELIGIBLE CUSTOMERSAPPROXIMATELY $1,648,984 FOR MUTUAL FUND PURCHASES MADEBETWEEN JULY 1, 2009 AND FEBRUARY 22, 2018.







Initiated By: FINRA





Principal Product Type: Mutual Fund(s)


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE, OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE APPLICATION OF SALES CHARGE WAIVERS AND SHARECLASS DETERMINATIONS FOR ELIGIBLE MUTUAL FUND SALES. THE FIRMRELIED ON ITS FINANCIAL ADVISORS TO DETERMINE THE APPLICABILITYOF SALES CHARGE WAIVERS, BUT FAILED TO MAINTAIN REASONABLYDESIGNED WRITTEN POLICIES OR PROCEDURES TO ASSIST FINANCIALADVISORS IN MAKING THIS DETERMINATION. FOR INSTANCE, THE FIRMFAILED TO ESTABLISH AND MAINTAIN WRITTEN PROCEDURES TOIDENTIFY APPLICABLE SALES CHARGE WAIVERS IN FUND PROSPECTUSESFOR ELIGIBLE CUSTOMERS. IN ADDITION, THE FIRM FAILED TOADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORS REGARDINGTHE AVAILABILITY OF MUTUAL FUND SALES-CHARGE WAIVERS FORELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ESTABLISHREASONABLY DESIGNED CONTROLS TO DETECT INSTANCES IN WHICHTHEY DID NOT PROVIDE SALES CHARGE WAIVERS TO ELIGIBLECUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. ASA RESULT OF THE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGEWAIVERS, THE FIRM OVERCHARGED ELIGIBLE CUSTOMERSAPPROXIMATELY $1,648,984 FOR MUTUAL FUND PURCHASES MADEBETWEEN JULY 1, 2009 AND FEBRUARY 22, 2018.


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED, FINED $225,000, AND REQUIRED TO PROVIDEFINRA WITH A PLAN TO REMEDIATE ELIGIBLE CUSTOMERS WHOQUALIFIED FOR, FROM JULY 1, 2009 TO FEBRUARY 22, 2018, BUT DID NOTRECEIVE, THE APPLICABLE MUTUAL FUND SALES-CHARGE WAIVER ORAPPROPRIATE SHARE CLASS. AS PART OF THIS SETTLEMENT, THE FIRMAGREES TO PAY RESTITUTION TO ELIGIBLE CUSTOMERS, WHICH ISESTIMATED TO TOTAL $1,947,704 (THE AMOUNT ELIGIBLE CUSTOMERSWERE OVERCHARGED, INCLUSIVE OF INTEREST). FINES PAID IN FULL ONFEBRUARY 21, 2019.


No




Allegations: ON FEBRUARY 13, 2019, KESTRA INVESTMENT SERVICES, LLC (KESTRA IS)AND THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA) AGREEDTO THE TERMS OF A LETTER OF ACCEPTANCE, WAIVER AND CONSENT INCONNECTION WITH THE KESTRA IS'S ALLEGED FAILURE TO IDENTIFY ANDAPPLY AVAILABLE SALES CHARGE WAIVERS TO ELIGIBLE RETIREMENTAND CHARITABLE ORGANIZATION ACCOUNTS IN VIOLATION OF NASDRULES 3010(A) AND (B) AND FINRA RULES 3110 (A) AND (B) AND 2010.WITHOUT ADMITTING OR DENYING THE FINDINGS, KESTRA IS AGREED TOACCEPT A CENSURE, PAY A FINE OF $225,000 AND PAY ELIGIBLECUSTOMERS AN ESTIMATED $1,947,704.








Initiated By: FINRA


Censure




Principal Product Type: Mutual Fund(s)


Allegations: ON FEBRUARY 13, 2019, KESTRA INVESTMENT SERVICES, LLC (KESTRA IS)AND THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA) AGREEDTO THE TERMS OF A LETTER OF ACCEPTANCE, WAIVER AND CONSENT INCONNECTION WITH THE KESTRA IS'S ALLEGED FAILURE TO IDENTIFY ANDAPPLY AVAILABLE SALES CHARGE WAIVERS TO ELIGIBLE RETIREMENTAND CHARITABLE ORGANIZATION ACCOUNTS IN VIOLATION OF NASDRULES 3010(A) AND (B) AND FINRA RULES 3110 (A) AND (B) AND 2010.WITHOUT ADMITTING OR DENYING THE FINDINGS, KESTRA IS AGREED TOACCEPT A CENSURE, PAY A FINE OF $225,000 AND PAY ELIGIBLECUSTOMERS AN ESTIMATED $1,947,704.


Resolution:


Sanction Details: THE FIRM WAS CENSURED, AND WILL PAY A FINE OF $225,000 AND PAYELIGIBLE CUSTOMERS AN ESTIMATED $1,947,704.



Disclosure 4 of 14

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Reporting Source: Firm

Initiated By: NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES


Allegations: VIOLATION OF INSURANCE LAW AND REGULATIONS, OPERATED IN THESTATE OF NEW YORK WITHOUT AN ACTIVE SUBLICENSEE, IN VIOLATIONOF SECTION 2103(C) OF THE INSURANCE LAW.











FINE OF $750.00

Docket/Case Number: 2017-0061-S


Other Product Type(s): VIOLATION OF INSURANCE LAW AND REGULATIONS


Resolution:


Sanction Details: RESPONDENT AGREES TO TAKE ALL NECESSARY STEPS TO PREVENT THERECURRENCE OF SIMILAR VIOLATIONS

Sanctions Ordered: Monetary/Fine $750.00

Settled

Disclosure 5 of 14

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Initiated By: NORTH CAROLINA DEPARTMENT OF INSURANCE




CIVIL PENALTY OF $250.00


Docket/Case Number: N/A


Other Product Type(s): FAILURE TO TIMELY FILE NOTICE TO THE INSURANCE DIVISION.

Allegations: FAILURE TO TIMELY FILE NOTICE OF ANNUAL VIATICAL SETTLEMENTBROKER REPORT DATED JUNE 29, 2016.



Resolution:


Sanctions Ordered: Monetary/Fine $250.00

Settled







Sanction Details: SIGNED VOLUNTARY SETTLEMENT AGREEMENT AND CHECK FOR $250.00ISSUED TO NORTH CAROLINA DEPARTMENT OF INSURANCE ON 5/19/2017

Firm Statement FAILURE TO TIMELY FILE NOTICE OF ANNUAL VIATICAL SETTLEMENTBROKER REPORT DATED JUNE 29, 2016.

Disclosure 6 of 14

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREASONABLY SUPERVISE ITS REGISTERED REPRESENTATIVES'RECOMMENDATION OF MULTI-SHARE CLASS VARIABLE ANNUITIES (VAS)TO ITS CUSTOMERS AND FAILED TO PROVIDE TRAINING TO ITSREGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE ANDSUPERVISION OF MULTI-SHARE CLASS VAS. THE FINDINGS STATED THATOF THE FIRM'S VA SALES, APPROXIMATELY 19 PERCENT, TOTALING $52MILLION IN INVESTMENTS, WERE L-SHARE CONTRACTS. DESPITE THESIGNIFICANT ROLE THAT VA SALES PLAYED IN THE FIRM'S OVERALLBUSINESS, THE FIRM FAILED TO IMPLEMENT A SUPERVISORY SYSTEMAND PROCEDURES DESIGNED TO REASONABLY ENSURE SUITABILITY INITS MULTI-SHARE CLASS VA SALES, INCLUDING L-SHARE CONTRACTS.INSURANCE COMPANIES DESIGN L-SHARE CONTRACTS SO THATCUSTOMERS PAY A HIGHER FEE FOR THE BENEFIT OF A SHORTERSURRENDER PERIOD. PURSUANT TO THE TERMS ESTABLISHED BY THEINSURANCE COMPANY MANUFACTURERS, IF A PURCHASER CHOOSESNOT TO SURRENDER AN L-SHARE CONTRACT DURING THE SURRENDERPERIOD, THE PURCHASER CONTINUES TO PAY A HIGHER ANNUAL FEE FORTHE LIFE OF THE CONTRACT, UNLESS THE CONTRACT PROVIDES FOR A "PERSISTENCY CREDIT." DESPITE THE FACT THAT 19 PERCENT OF THEVAS SOLD AT THE FIRM DURING THE RELEVANT TIME PERIOD WERE L-SHARE CONTRACTS, THE FIRM FAILED TO ESTABLISH, MAINTAIN, ANDENFORCE A REASONABLE SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES (WSPS) RELATED TO THE SALE OF MULTI-SHARE CLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILEDTO PROVIDE REGISTERED REPRESENTATIVES AND PRINCIPALSGUIDANCE OR SUITABILITY CONSIDERATIONS FOR SALES OF DIFFERENTVA SHARE CLASSES. BECAUSE OF THE LACK OF TRAINING ANDGUIDANCE, REGISTERED REPRESENTATIVES DID NOT HAVE THE TOOLSTO PRESENT POTENTIAL PURCHASERS WITH A SIDE-BY-SIDECOMPARISON OF THE FEES AND SURRENDER CHARGES OR OTHERINFORMATION DETAILING THE POTENTIAL IMPACT OF THE INCREASED FEEIF THE L-SHARE CONTRACT WAS HELD BY THE CUSTOMER FOR A LONGTERM. IN ADDITION, THE FIRM FAILED TO ESTABLISH, MAINTAIN, ANDENFORCE WSPS OR PROVIDE SUFFICIENT GUIDANCE OR TRAINING TOTHEIR REGISTERED REPRESENTATIVES AND THEIR PRINCIPALS ON THESALE OF LONG TERM INCOME RIDERS WITH MULTI-SHARE CLASS VAS,PARTICULARLY THE COMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO ESTABLISH, MAINTAIN, AND ENFORCE AN ADEQUATESUPERVISORY SYSTEM, INCLUDING WSPS, THAT WAS REASONABLYDESIGNED TO REVIEW AND MONITOR CONSOLIDATED REPORTS SENT TOCUSTOMERS BY REGISTERED REPRESENTATIVES. THE FIRM SUPERVISEDTHE GENERATION AND DISSEMINATION OF CONSOLIDATED REPORTS INTHE SAME MANNER THAT IT SUPERVISED CORRESPONDENCEGENERALLY. IF A CONSOLIDATED REPORT WAS SENT TO A CLIENT VIAMAIL OR PERSONAL DELIVERY, THEN THE REPRESENTATIVE WASREQUIRED TO SUBMIT THE REPORT FOR REVIEW THROUGH THEADVERTISING COMPLIANCE REVIEW (ACR) SYSTEM, WHICH REQUIRESTHAT SALES SUPERVISORS REVIEW AND APPROVE OUTGOINGCORRESPONDENCE. THE FIRM'S REVIEW OF CONSOLIDATED REPORTSSUBMITTED TO THIS SYSTEM WAS GENERALLY LIMITED TO DETERMININGWHETHER SUCH REPORTS WERE CONSISTENT WITH THE PRE-APPROVEDTEMPLATE, AND DID NOT INCLUDE AN INDEPENDENT VERIFICATION OFWHETHER ASSET VALUES PROVIDED ON THE REPORTS WERE ACCURATE.CONSOLIDATED REPORTS THAT WERE DISSEMINATED TO CUSTOMERSVIA EMAIL WERE NOT REQUIRED TO BE SUBMITTED THROUGH THE ACRSYSTEM. INSTEAD, SUCH REPORTS WERE REVIEWED ONLY AS PART OFTHE FIRM'S EMAIL REVIEW PROCESS. AS A RESULT, AN EMAILEDCONSOLIDATED REPORT WOULD BE REVIEWED ONLY IF IT WASSELECTED FOR A "SPOT CHECK" OR WAS FLAGGED BECAUSE IT UTILIZEDONE OF THE FIRM'S SELECTED LEXICONS OF POTENTIALLY PROBLEMATICWORDS. THE FIRM'S WSPS REGARDING CONSOLIDATED REPORTS DIDNOT REQUIRE THE INDEPENDENT VERIFICATION OF ASSET VALUES THATWERE PROVIDED ON THE REPORTS AND DID NOT REQUIRE THE SENDINGOF BACK-UP DATA TO ALLOW FOR VERIFICATION OF THE SUBSTANTIVEACCURACY OF THE DATA.







Initiated By: FINRA





Principal Product Type: Annuity(ies) - Variable


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREASONABLY SUPERVISE ITS REGISTERED REPRESENTATIVES'RECOMMENDATION OF MULTI-SHARE CLASS VARIABLE ANNUITIES (VAS)TO ITS CUSTOMERS AND FAILED TO PROVIDE TRAINING TO ITSREGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE ANDSUPERVISION OF MULTI-SHARE CLASS VAS. THE FINDINGS STATED THATOF THE FIRM'S VA SALES, APPROXIMATELY 19 PERCENT, TOTALING $52MILLION IN INVESTMENTS, WERE L-SHARE CONTRACTS. DESPITE THESIGNIFICANT ROLE THAT VA SALES PLAYED IN THE FIRM'S OVERALLBUSINESS, THE FIRM FAILED TO IMPLEMENT A SUPERVISORY SYSTEMAND PROCEDURES DESIGNED TO REASONABLY ENSURE SUITABILITY INITS MULTI-SHARE CLASS VA SALES, INCLUDING L-SHARE CONTRACTS.INSURANCE COMPANIES DESIGN L-SHARE CONTRACTS SO THATCUSTOMERS PAY A HIGHER FEE FOR THE BENEFIT OF A SHORTERSURRENDER PERIOD. PURSUANT TO THE TERMS ESTABLISHED BY THEINSURANCE COMPANY MANUFACTURERS, IF A PURCHASER CHOOSESNOT TO SURRENDER AN L-SHARE CONTRACT DURING THE SURRENDERPERIOD, THE PURCHASER CONTINUES TO PAY A HIGHER ANNUAL FEE FORTHE LIFE OF THE CONTRACT, UNLESS THE CONTRACT PROVIDES FOR A "PERSISTENCY CREDIT." DESPITE THE FACT THAT 19 PERCENT OF THEVAS SOLD AT THE FIRM DURING THE RELEVANT TIME PERIOD WERE L-SHARE CONTRACTS, THE FIRM FAILED TO ESTABLISH, MAINTAIN, ANDENFORCE A REASONABLE SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES (WSPS) RELATED TO THE SALE OF MULTI-SHARE CLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILEDTO PROVIDE REGISTERED REPRESENTATIVES AND PRINCIPALSGUIDANCE OR SUITABILITY CONSIDERATIONS FOR SALES OF DIFFERENTVA SHARE CLASSES. BECAUSE OF THE LACK OF TRAINING ANDGUIDANCE, REGISTERED REPRESENTATIVES DID NOT HAVE THE TOOLSTO PRESENT POTENTIAL PURCHASERS WITH A SIDE-BY-SIDECOMPARISON OF THE FEES AND SURRENDER CHARGES OR OTHERINFORMATION DETAILING THE POTENTIAL IMPACT OF THE INCREASED FEEIF THE L-SHARE CONTRACT WAS HELD BY THE CUSTOMER FOR A LONGTERM. IN ADDITION, THE FIRM FAILED TO ESTABLISH, MAINTAIN, ANDENFORCE WSPS OR PROVIDE SUFFICIENT GUIDANCE OR TRAINING TOTHEIR REGISTERED REPRESENTATIVES AND THEIR PRINCIPALS ON THESALE OF LONG TERM INCOME RIDERS WITH MULTI-SHARE CLASS VAS,PARTICULARLY THE COMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO ESTABLISH, MAINTAIN, AND ENFORCE AN ADEQUATESUPERVISORY SYSTEM, INCLUDING WSPS, THAT WAS REASONABLYDESIGNED TO REVIEW AND MONITOR CONSOLIDATED REPORTS SENT TOCUSTOMERS BY REGISTERED REPRESENTATIVES. THE FIRM SUPERVISEDTHE GENERATION AND DISSEMINATION OF CONSOLIDATED REPORTS INTHE SAME MANNER THAT IT SUPERVISED CORRESPONDENCEGENERALLY. IF A CONSOLIDATED REPORT WAS SENT TO A CLIENT VIAMAIL OR PERSONAL DELIVERY, THEN THE REPRESENTATIVE WASREQUIRED TO SUBMIT THE REPORT FOR REVIEW THROUGH THEADVERTISING COMPLIANCE REVIEW (ACR) SYSTEM, WHICH REQUIRESTHAT SALES SUPERVISORS REVIEW AND APPROVE OUTGOINGCORRESPONDENCE. THE FIRM'S REVIEW OF CONSOLIDATED REPORTSSUBMITTED TO THIS SYSTEM WAS GENERALLY LIMITED TO DETERMININGWHETHER SUCH REPORTS WERE CONSISTENT WITH THE PRE-APPROVEDTEMPLATE, AND DID NOT INCLUDE AN INDEPENDENT VERIFICATION OFWHETHER ASSET VALUES PROVIDED ON THE REPORTS WERE ACCURATE.CONSOLIDATED REPORTS THAT WERE DISSEMINATED TO CUSTOMERSVIA EMAIL WERE NOT REQUIRED TO BE SUBMITTED THROUGH THE ACRSYSTEM. INSTEAD, SUCH REPORTS WERE REVIEWED ONLY AS PART OFTHE FIRM'S EMAIL REVIEW PROCESS. AS A RESULT, AN EMAILEDCONSOLIDATED REPORT WOULD BE REVIEWED ONLY IF IT WASSELECTED FOR A "SPOT CHECK" OR WAS FLAGGED BECAUSE IT UTILIZEDONE OF THE FIRM'S SELECTED LEXICONS OF POTENTIALLY PROBLEMATICWORDS. THE FIRM'S WSPS REGARDING CONSOLIDATED REPORTS DIDNOT REQUIRE THE INDEPENDENT VERIFICATION OF ASSET VALUES THATWERE PROVIDED ON THE REPORTS AND DID NOT REQUIRE THE SENDINGOF BACK-UP DATA TO ALLOW FOR VERIFICATION OF THE SUBSTANTIVEACCURACY OF THE DATA.









Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $475,000. FINES PAID IN FULL ONNOVEMBER 15, 2016.


No




Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREASONABLY SUPERVISE ITS REGISTERED REPRESENTATIVES'RECOMMENDATION OF MULTI-SHARE CLASS VARIABLE ANNUITIES (VAS)TO ITS CUSTOMERS. THE FINDINGS STATED THAT DESPITE THESIGNIFICANT ROLE THAT VA SALES PLAYED IN THE FIRM'S OVERALLBUSINESS, THE FIRM FAILED TO IMPLEMENT A SUPERVISORYSYSTEM ANDPROCEDURES DESIGNED TO REASONABLY ENSURE SUITABILITY IN ITSMULTI-SHARE CLASS VA SALES, INCLUDING L-SHARE CONTRACTS. THEFIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A REASONABLESUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES(WSPS) RELATED TO THE SALE OF MULTI-SHARE CLASS VAS. THE FIRM'SWSPS AND TRAINING MATERIALS FAILED TO PROVIDE REGISTEREDREPRESENTATIVES AND PRINCIPALS GUIDANCE OR SUITABILITYCONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. THEFIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS OR PROVIDESUFFICIENT GUIDANCE OR TRAINING TO THEIR REGISTEREDREPRESENTATIVES AND THEIR PRINCIPALS ON THE SALE OF LONG TERMINCOME RIDERS WITH MULTI-SHARE CLASS VAS, PARTICULARLY THECOMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOMERIDERS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOESTABLISH, MAINTAIN, AND ENFORCE AN ADEQUATE SUPERVISORYSYSTEM, INCLUDING WSPS, THAT WAS REASONABLY DESIGNED TOREVIEW AND MONITOR CONSOLIDATED REPORTS SENT TO CUSTOMERSBY REGISTERED REPRESENTATIVES.







Initiated By: FINRA


Censure






WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREASONABLY SUPERVISE ITS REGISTERED REPRESENTATIVES'RECOMMENDATION OF MULTI-SHARE CLASS VARIABLE ANNUITIES (VAS)TO ITS CUSTOMERS. THE FINDINGS STATED THAT DESPITE THESIGNIFICANT ROLE THAT VA SALES PLAYED IN THE FIRM'S OVERALLBUSINESS, THE FIRM FAILED TO IMPLEMENT A SUPERVISORYSYSTEM ANDPROCEDURES DESIGNED TO REASONABLY ENSURE SUITABILITY IN ITSMULTI-SHARE CLASS VA SALES, INCLUDING L-SHARE CONTRACTS. THEFIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A REASONABLESUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES(WSPS) RELATED TO THE SALE OF MULTI-SHARE CLASS VAS. THE FIRM'SWSPS AND TRAINING MATERIALS FAILED TO PROVIDE REGISTEREDREPRESENTATIVES AND PRINCIPALS GUIDANCE OR SUITABILITYCONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. THEFIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS OR PROVIDESUFFICIENT GUIDANCE OR TRAINING TO THEIR REGISTEREDREPRESENTATIVES AND THEIR PRINCIPALS ON THE SALE OF LONG TERMINCOME RIDERS WITH MULTI-SHARE CLASS VAS, PARTICULARLY THECOMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOMERIDERS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOESTABLISH, MAINTAIN, AND ENFORCE AN ADEQUATE SUPERVISORYSYSTEM, INCLUDING WSPS, THAT WAS REASONABLY DESIGNED TOREVIEW AND MONITOR CONSOLIDATED REPORTS SENT TO CUSTOMERSBY REGISTERED REPRESENTATIVES.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $475,000.



Disclosure 7 of 14

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOSUPERVISE PRIVATE SECURITIES TRANSACTIONS OF REGISTEREDREPRESENTATIVES WHO WERE DUALLY REGISTERED WITH IT AND AREGISTERED INVESTMENT ADVISOR (RIA). THE FIRM LEARNED DURING ANEXAMINATION THAT ONE OF ITS REGISTERED REPRESENTATIVES WASRECOMMENDING "MANAGED ACCOUNTS" AND "ALTERNATIVEINVESTMENTS" THROUGH HIS OUTSIDE RIA, AN UNDISCLOSED BUSINESS.THEREAFTER, HE DISCLOSED TO THE FIRM THAT HE WAS MANAGING ANINVESTMENT FUND AS AN OUTSIDE BUSINESS ACTIVITY. THE FIRM DIDNOT ADEQUATELY INVESTIGATE RED FLAGS OR FOLLOW-UP ON THEDISCLOSURE TO ENSURE THAT HE WAS NOT ENGAGING IN PRIVATESECURITIES TRANSACTIONS IN VIOLATION OF NASD RULE 3040. AS ARESULT OF THE FIRM'S FAILURE TO INVESTIGATE HIS OUTSIDEACTIVITIES, THE FIRM FAILED TO IDENTIFY HIS PARTICIPATION IN PRIVATESECURITIES TRANSACTIONS AND FAILED TO SUPERVISE HISPARTICIPATION IN THOSE TRANSACTIONS. THE FIRM ALSO FAILED TOSUPERVISE THE ADVISORY ACTIVITY OF 79 REGISTEREDREPRESENTATIVES WHO WERE DUALLY REGISTERED WITH IT ANDFOURTEEN RIAS. THESE FOURTEEN RIAS HAD MORE THAN $3 BILLION INASSETS UNDER MANAGEMENT, A PORTION OF WHICH WAS UNDER THEMANAGEMENT OF THE 79 REGISTERED REPRESENTATIVES. THE FIRMFAILED TO COMPLY WITH ITS RESPONSIBILITIES UNDER THE APPLICABLERULE TO SUPERVISE THESE REPRESENTATIVES' PARTICIPATION IN THETRANSACTIONS AS IF THE TRANSACTIONS WERE EXECUTED ON BEHALFOF THE MEMBER. MOREOVER, THE FIRM FAILED TO RECORD THESETRANSACTIONS ON ITS BOOKS AND RECORDS. THE FINDINGS STATEDTHAT BY THE FIRM'S CONDUCT IT FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM THAT WAS REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE RULE. THE FINDINGS ALSO STATEDTHAT THE FIRM FAILED TO PRESERVE SECURITIES-RELATED EMAILS THATWERE SENT AND RECEIVED BY REGISTERED REPRESENTATIVESTHROUGH UNMONITORED EMAIL ADDRESSES. THE FIRM HADCORRESPONDED WITH THESE REGISTERED REPRESENTATIVESTHROUGH THESE UNMONITORED EMAIL ADDRESSES, BUT FAILED TOINVESTIGATE WHETHER THE EMAIL ADDRESSES WERE APPROVED ANDMONITORED BY THE FIRM. THE FIRM FAILED TO HAVE A SUPERVISORYSYSTEM THAT WAS DESIGNED TO ENSURE THAT ALL SECURITIES-RELATED EMAILS OF ITS REPRESENTATIVES WERE BEING PROPERLYPRESERVED. THE FINDINGS ALSO INCLUDED THAT THE FIRM EITHERKNEW, OR SHOULD HAVE KNOWN, ABOUT THREE SEPARATE SECURITIES-RELATED WEBSITES THAT ONE OF ITS REGISTERED REPRESENTATIVESMAINTAINED AND OPERATED. THE FIRM FAILED TO PROVIDE PRINCIPALAPPROVAL OF THE ADVERTISING STATEMENTS CONTAINED ON THESEWEBSITES. THE FIRM FURTHER FAILED TO MAINTAIN A RECORD OF THECOMMUNICATIONS ON THESE WEBSITES. FINRA FOUND THAT THE FIRMFAILED TO TIMELY AMEND FORM U4S OF ITS REGISTEREDREPRESENTATIVES IN 81 SEPARATE INSTANCES. IN EACH OF THESEINSTANCES, THE FIRM'S REGISTERED REPRESENTATIVES HAD PROPERLYDISCLOSED THEIR PARTICIPATION IN AN OUTSIDE BUSINESS ACTIVITY(OBA). MOREOVER, FINRA ADVISED THE FIRM OF ITS DEFICIENCIES INTIMELY-FILING FORM U4 AMENDMENTS FOR OBAS. DESPITE HAVINGACTUAL KNOWLEDGE OF THESE DEFICIENCIES, THE FIRM HAD FAILED TOFILE U4 AMENDMENTS FOR MORE THAN FOUR MONTHS AFTER FINRAADVISED THE FIRM OF THIS ISSUE. THUS, THE FIRM FAILED TO CORRECTFORMS U4 THAT IT KNEW WERE INCOMPLETE OR INACCURATE DESPITENOTICE THEREOF. IN ADDITION, ALTHOUGH THE FIRM INCREASED ITSEFFORTS TO ENCOURAGE REGISTERED REPRESENTATIVES TO REPORTTHEIR OBAS WITH THE IMPLEMENTATION OF FINRA RULE 3270, IT FAILEDTO PROPERLY SCRUTINIZE THESE DISCLOSURES TO ENSURE THAT ALLACTUAL OBAS WERE BEING PROPERLY DISCLOSED ON A FORM U4AMENDMENT. MOREOVER, THE FIRM MAINTAINED A MANUAL SYSTEM FORREVIEWING DISCLOSURES AND FILING FORM U4 AMENDMENTS THAT WASSUSCEPTIBLE TO HUMAN ERROR. THE FIRM THUS DID NOT HAVE ASUPERVISORY SYSTEM IN PLACE THAT WAS REASONABLY DESIGNED TOENSURE COMPLIANCE WITH ITS FORM U4 REPORTING OBLIGATIONS.








WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOSUPERVISE PRIVATE SECURITIES TRANSACTIONS OF REGISTEREDREPRESENTATIVES WHO WERE DUALLY REGISTERED WITH IT AND AREGISTERED INVESTMENT ADVISOR (RIA). THE FIRM LEARNED DURING ANEXAMINATION THAT ONE OF ITS REGISTERED REPRESENTATIVES WASRECOMMENDING "MANAGED ACCOUNTS" AND "ALTERNATIVEINVESTMENTS" THROUGH HIS OUTSIDE RIA, AN UNDISCLOSED BUSINESS.THEREAFTER, HE DISCLOSED TO THE FIRM THAT HE WAS MANAGING ANINVESTMENT FUND AS AN OUTSIDE BUSINESS ACTIVITY. THE FIRM DIDNOT ADEQUATELY INVESTIGATE RED FLAGS OR FOLLOW-UP ON THEDISCLOSURE TO ENSURE THAT HE WAS NOT ENGAGING IN PRIVATESECURITIES TRANSACTIONS IN VIOLATION OF NASD RULE 3040. AS ARESULT OF THE FIRM'S FAILURE TO INVESTIGATE HIS OUTSIDEACTIVITIES, THE FIRM FAILED TO IDENTIFY HIS PARTICIPATION IN PRIVATESECURITIES TRANSACTIONS AND FAILED TO SUPERVISE HISPARTICIPATION IN THOSE TRANSACTIONS. THE FIRM ALSO FAILED TOSUPERVISE THE ADVISORY ACTIVITY OF 79 REGISTEREDREPRESENTATIVES WHO WERE DUALLY REGISTERED WITH IT ANDFOURTEEN RIAS. THESE FOURTEEN RIAS HAD MORE THAN $3 BILLION INASSETS UNDER MANAGEMENT, A PORTION OF WHICH WAS UNDER THEMANAGEMENT OF THE 79 REGISTERED REPRESENTATIVES. THE FIRMFAILED TO COMPLY WITH ITS RESPONSIBILITIES UNDER THE APPLICABLERULE TO SUPERVISE THESE REPRESENTATIVES' PARTICIPATION IN THETRANSACTIONS AS IF THE TRANSACTIONS WERE EXECUTED ON BEHALFOF THE MEMBER. MOREOVER, THE FIRM FAILED TO RECORD THESETRANSACTIONS ON ITS BOOKS AND RECORDS. THE FINDINGS STATEDTHAT BY THE FIRM'S CONDUCT IT FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM THAT WAS REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE RULE. THE FINDINGS ALSO STATEDTHAT THE FIRM FAILED TO PRESERVE SECURITIES-RELATED EMAILS THATWERE SENT AND RECEIVED BY REGISTERED REPRESENTATIVESTHROUGH UNMONITORED EMAIL ADDRESSES. THE FIRM HADCORRESPONDED WITH THESE REGISTERED REPRESENTATIVESTHROUGH THESE UNMONITORED EMAIL ADDRESSES, BUT FAILED TOINVESTIGATE WHETHER THE EMAIL ADDRESSES WERE APPROVED ANDMONITORED BY THE FIRM. THE FIRM FAILED TO HAVE A SUPERVISORYSYSTEM THAT WAS DESIGNED TO ENSURE THAT ALL SECURITIES-RELATED EMAILS OF ITS REPRESENTATIVES WERE BEING PROPERLYPRESERVED. THE FINDINGS ALSO INCLUDED THAT THE FIRM EITHERKNEW, OR SHOULD HAVE KNOWN, ABOUT THREE SEPARATE SECURITIES-RELATED WEBSITES THAT ONE OF ITS REGISTERED REPRESENTATIVESMAINTAINED AND OPERATED. THE FIRM FAILED TO PROVIDE PRINCIPALAPPROVAL OF THE ADVERTISING STATEMENTS CONTAINED ON THESEWEBSITES. THE FIRM FURTHER FAILED TO MAINTAIN A RECORD OF THECOMMUNICATIONS ON THESE WEBSITES. FINRA FOUND THAT THE FIRMFAILED TO TIMELY AMEND FORM U4S OF ITS REGISTEREDREPRESENTATIVES IN 81 SEPARATE INSTANCES. IN EACH OF THESEINSTANCES, THE FIRM'S REGISTERED REPRESENTATIVES HAD PROPERLYDISCLOSED THEIR PARTICIPATION IN AN OUTSIDE BUSINESS ACTIVITY(OBA). MOREOVER, FINRA ADVISED THE FIRM OF ITS DEFICIENCIES INTIMELY-FILING FORM U4 AMENDMENTS FOR OBAS. DESPITE HAVINGACTUAL KNOWLEDGE OF THESE DEFICIENCIES, THE FIRM HAD FAILED TOFILE U4 AMENDMENTS FOR MORE THAN FOUR MONTHS AFTER FINRAADVISED THE FIRM OF THIS ISSUE. THUS, THE FIRM FAILED TO CORRECTFORMS U4 THAT IT KNEW WERE INCOMPLETE OR INACCURATE DESPITENOTICE THEREOF. IN ADDITION, ALTHOUGH THE FIRM INCREASED ITSEFFORTS TO ENCOURAGE REGISTERED REPRESENTATIVES TO REPORTTHEIR OBAS WITH THE IMPLEMENTATION OF FINRA RULE 3270, IT FAILEDTO PROPERLY SCRUTINIZE THESE DISCLOSURES TO ENSURE THAT ALLACTUAL OBAS WERE BEING PROPERLY DISCLOSED ON A FORM U4AMENDMENT. MOREOVER, THE FIRM MAINTAINED A MANUAL SYSTEM FORREVIEWING DISCLOSURES AND FILING FORM U4 AMENDMENTS THAT WASSUSCEPTIBLE TO HUMAN ERROR. THE FIRM THUS DID NOT HAVE ASUPERVISORY SYSTEM IN PLACE THAT WAS REASONABLY DESIGNED TOENSURE COMPLIANCE WITH ITS FORM U4 REPORTING OBLIGATIONS.






Initiated By: FINRA







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOSUPERVISE PRIVATE SECURITIES TRANSACTIONS OF REGISTEREDREPRESENTATIVES WHO WERE DUALLY REGISTERED WITH IT AND AREGISTERED INVESTMENT ADVISOR (RIA). THE FIRM LEARNED DURING ANEXAMINATION THAT ONE OF ITS REGISTERED REPRESENTATIVES WASRECOMMENDING "MANAGED ACCOUNTS" AND "ALTERNATIVEINVESTMENTS" THROUGH HIS OUTSIDE RIA, AN UNDISCLOSED BUSINESS.THEREAFTER, HE DISCLOSED TO THE FIRM THAT HE WAS MANAGING ANINVESTMENT FUND AS AN OUTSIDE BUSINESS ACTIVITY. THE FIRM DIDNOT ADEQUATELY INVESTIGATE RED FLAGS OR FOLLOW-UP ON THEDISCLOSURE TO ENSURE THAT HE WAS NOT ENGAGING IN PRIVATESECURITIES TRANSACTIONS IN VIOLATION OF NASD RULE 3040. AS ARESULT OF THE FIRM'S FAILURE TO INVESTIGATE HIS OUTSIDEACTIVITIES, THE FIRM FAILED TO IDENTIFY HIS PARTICIPATION IN PRIVATESECURITIES TRANSACTIONS AND FAILED TO SUPERVISE HISPARTICIPATION IN THOSE TRANSACTIONS. THE FIRM ALSO FAILED TOSUPERVISE THE ADVISORY ACTIVITY OF 79 REGISTEREDREPRESENTATIVES WHO WERE DUALLY REGISTERED WITH IT ANDFOURTEEN RIAS. THESE FOURTEEN RIAS HAD MORE THAN $3 BILLION INASSETS UNDER MANAGEMENT, A PORTION OF WHICH WAS UNDER THEMANAGEMENT OF THE 79 REGISTERED REPRESENTATIVES. THE FIRMFAILED TO COMPLY WITH ITS RESPONSIBILITIES UNDER THE APPLICABLERULE TO SUPERVISE THESE REPRESENTATIVES' PARTICIPATION IN THETRANSACTIONS AS IF THE TRANSACTIONS WERE EXECUTED ON BEHALFOF THE MEMBER. MOREOVER, THE FIRM FAILED TO RECORD THESETRANSACTIONS ON ITS BOOKS AND RECORDS. THE FINDINGS STATEDTHAT BY THE FIRM'S CONDUCT IT FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM THAT WAS REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE RULE. THE FINDINGS ALSO STATEDTHAT THE FIRM FAILED TO PRESERVE SECURITIES-RELATED EMAILS THATWERE SENT AND RECEIVED BY REGISTERED REPRESENTATIVESTHROUGH UNMONITORED EMAIL ADDRESSES. THE FIRM HADCORRESPONDED WITH THESE REGISTERED REPRESENTATIVESTHROUGH THESE UNMONITORED EMAIL ADDRESSES, BUT FAILED TOINVESTIGATE WHETHER THE EMAIL ADDRESSES WERE APPROVED ANDMONITORED BY THE FIRM. THE FIRM FAILED TO HAVE A SUPERVISORYSYSTEM THAT WAS DESIGNED TO ENSURE THAT ALL SECURITIES-RELATED EMAILS OF ITS REPRESENTATIVES WERE BEING PROPERLYPRESERVED. THE FINDINGS ALSO INCLUDED THAT THE FIRM EITHERKNEW, OR SHOULD HAVE KNOWN, ABOUT THREE SEPARATE SECURITIES-RELATED WEBSITES THAT ONE OF ITS REGISTERED REPRESENTATIVESMAINTAINED AND OPERATED. THE FIRM FAILED TO PROVIDE PRINCIPALAPPROVAL OF THE ADVERTISING STATEMENTS CONTAINED ON THESEWEBSITES. THE FIRM FURTHER FAILED TO MAINTAIN A RECORD OF THECOMMUNICATIONS ON THESE WEBSITES. FINRA FOUND THAT THE FIRMFAILED TO TIMELY AMEND FORM U4S OF ITS REGISTEREDREPRESENTATIVES IN 81 SEPARATE INSTANCES. IN EACH OF THESEINSTANCES, THE FIRM'S REGISTERED REPRESENTATIVES HAD PROPERLYDISCLOSED THEIR PARTICIPATION IN AN OUTSIDE BUSINESS ACTIVITY(OBA). MOREOVER, FINRA ADVISED THE FIRM OF ITS DEFICIENCIES INTIMELY-FILING FORM U4 AMENDMENTS FOR OBAS. DESPITE HAVINGACTUAL KNOWLEDGE OF THESE DEFICIENCIES, THE FIRM HAD FAILED TOFILE U4 AMENDMENTS FOR MORE THAN FOUR MONTHS AFTER FINRAADVISED THE FIRM OF THIS ISSUE. THUS, THE FIRM FAILED TO CORRECTFORMS U4 THAT IT KNEW WERE INCOMPLETE OR INACCURATE DESPITENOTICE THEREOF. IN ADDITION, ALTHOUGH THE FIRM INCREASED ITSEFFORTS TO ENCOURAGE REGISTERED REPRESENTATIVES TO REPORTTHEIR OBAS WITH THE IMPLEMENTATION OF FINRA RULE 3270, IT FAILEDTO PROPERLY SCRUTINIZE THESE DISCLOSURES TO ENSURE THAT ALLACTUAL OBAS WERE BEING PROPERLY DISCLOSED ON A FORM U4AMENDMENT. MOREOVER, THE FIRM MAINTAINED A MANUAL SYSTEM FORREVIEWING DISCLOSURES AND FILING FORM U4 AMENDMENTS THAT WASSUSCEPTIBLE TO HUMAN ERROR. THE FIRM THUS DID NOT HAVE ASUPERVISORY SYSTEM IN PLACE THAT WAS REASONABLY DESIGNED TOENSURE COMPLIANCE WITH ITS FORM U4 REPORTING OBLIGATIONS.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $500,000. FINE PAID IN FULL JULY28, 2015.


No




Allegations: ALLEGED VIOLATIONS OF FINRA BY-LAWS ARTICLE V, SECTION 2, FINRARULES 1122, 2010 AND 4511, NASD RULES 2110, 2210(B), 3010(A), 3040(C)(2)AND 3110, AND SECTION 17(A) OF THE SECURITIES EXCHANGE ACT OF1934 AND RULE 17A-4 THEREUNDER WITH RESPECT TO, AT VARIOUSTIMES FROM DECEMBER 2006 THROUGH JANUARY 2014, THESUPERVISION OF SECURITIES TRANSACTIONS OF REPRESENTATIVESDUALLY REGISTERED WITH REGISTERED INVESTMENT ADVISERS,PRESERVATION OF E-MAILS, PRESERVATION OF ADVERTISING AND TIMELYUPDATES TO FORM U-4.








Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)




CENSURE





ALLEGED VIOLATIONS OF FINRA BY-LAWS ARTICLE V, SECTION 2, FINRARULES 1122, 2010 AND 4511, NASD RULES 2110, 2210(B), 3010(A), 3040(C)(2)AND 3110, AND SECTION 17(A) OF THE SECURITIES EXCHANGE ACT OF1934 AND RULE 17A-4 THEREUNDER WITH RESPECT TO, AT VARIOUSTIMES FROM DECEMBER 2006 THROUGH JANUARY 2014, THESUPERVISION OF SECURITIES TRANSACTIONS OF REPRESENTATIVESDUALLY REGISTERED WITH REGISTERED INVESTMENT ADVISERS,PRESERVATION OF E-MAILS, PRESERVATION OF ADVERTISING AND TIMELYUPDATES TO FORM U-4.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE UNDERLYING ALLEGATIONS, THEFIRM AGREED TO ACCEPT A CENSURE AND PAY A FINE OF $500,000. THEFINE WAS PAID ON JULY 28, 2015.



Disclosure 8 of 14

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Allegations: NASD RULES 2110, 2440, 3010: THE FIRM CHARGED EXCESSIVE MARKUPSON SEVERAL RISKLESS PRINCIPAL CORPORATE BOND TRANSACTIONS INTHE ACCOUNT OF A CUSTOMER. IN EACH INSTANCE, THE FIRMPURCHASED THE BONDS, ADDED A MARKUP AND IMMEDIATELY, ON THESAME DAY OF PURCHASE, SOLD THE BONDS TO THE CUSTOMER. THEFIRM'S MARKUPS ON THE TRANSACTIONS WERE NOT FAIR ANDREASONABLE TAKING INTO CONSIDERATION ALL RELEVANTCIRCUMSTANCES, INCLUDING THE FACT THAT THE PRICE WAS NOTREASONABLY RELATED TO THE AMOUNT THE FIRM HADCONTEMPORANEOUSLY PAID FOR THE BONDS AND THE FACT THAT THEFIRM DID NOT PROVIDE ANY EVIDENCE TO OVERCOME THEPRESUMPTION THAT ITS CONTEMPORANEOUS COST CONSTITUTED THEBEST MEASURE OF THE PREVAILING MARKET PRICE OF THE BONDS SOLDTO THE CUSTOMER. THE MARKUPS CHARGED BY THE FIRM IN THETRANSACTIONS EXCEEDED THE AMOUNTS CHARGED BY OTHER DEALERSIN SIMILAR TRANSACTION BY $43,121.39. THE FIRM ALSO FAILED TOESTABLISH, MAINTAIN AND/OR ENFORCE A SUPERVISORY SYSTEM ANDWRITTEN SUPERVISORY PROCEDURES THAT WERE REASONABLYDESIGNED TO ENSURE THE FAIRNESS OF PRICES IN PRINCIPALTRANSACTIONS WITH CUSTOMERS. THE FIRM'S SUPERVISORY SYSTEMAND WRITTEN SUPERVISORY PROCEDURES WERE NOT REASONABLYDESIGNED TO ENSURE THAT PRICES AT WHICH IT SOLD DEBT SECURITIESTO CUSTOMERS IN PRINCIPAL TRANSACTIONS WERE FAIR ANDREASONABLE, NOR DESIGNED TO ACHIEVE COMPLIANCE WITH ALLAPPLICABLE LAWS, RULES AND REGULATIONS PERTAINING TO EFFECTINGPRINCIPAL TRANSACTIONS WITH CUSTOMERS. THE FIRM'S WRITTENSUPERVISORY PROCEDURES IN EFFECT DID NOT ADDRESS OR DISCUSS,TO ANY MATERIAL EXTENT, INTERPRETATIVE MATERIAL-2440-1 ORINTERPRETATIVE MATERIAL-2440-2 AND DID NOT CONTAIN PROCEDURESFOR WEIGHING OR APPLYING, INCLUDING HOW TO WEIGH OR APPLY, THEVARIOUS FACTORS SET FORTH IN THOSE PROVISIONS IN REVIEWING ANDEVALUATING THE FAIRNESS OF PRICES IN PRINCIPAL TRANSACTIONSWITH CUSTOMERS. THE FIRM'S PROCEDURES ALSO DID NOT ADDRESSHOW SUPERVISORY REVIEWS OF MARKUPS AND MARKDOWNS INPRINCIPAL TRANSACTIONS WITH CUSTOMERS WOULD BE CONDUCTED.








Initiated By: FINRA


Other


N/A



Principal Product Type: Debt - Corporate


NASD RULES 2110, 2440, 3010: THE FIRM CHARGED EXCESSIVE MARKUPSON SEVERAL RISKLESS PRINCIPAL CORPORATE BOND TRANSACTIONS INTHE ACCOUNT OF A CUSTOMER. IN EACH INSTANCE, THE FIRMPURCHASED THE BONDS, ADDED A MARKUP AND IMMEDIATELY, ON THESAME DAY OF PURCHASE, SOLD THE BONDS TO THE CUSTOMER. THEFIRM'S MARKUPS ON THE TRANSACTIONS WERE NOT FAIR ANDREASONABLE TAKING INTO CONSIDERATION ALL RELEVANTCIRCUMSTANCES, INCLUDING THE FACT THAT THE PRICE WAS NOTREASONABLY RELATED TO THE AMOUNT THE FIRM HADCONTEMPORANEOUSLY PAID FOR THE BONDS AND THE FACT THAT THEFIRM DID NOT PROVIDE ANY EVIDENCE TO OVERCOME THEPRESUMPTION THAT ITS CONTEMPORANEOUS COST CONSTITUTED THEBEST MEASURE OF THE PREVAILING MARKET PRICE OF THE BONDS SOLDTO THE CUSTOMER. THE MARKUPS CHARGED BY THE FIRM IN THETRANSACTIONS EXCEEDED THE AMOUNTS CHARGED BY OTHER DEALERSIN SIMILAR TRANSACTION BY $43,121.39. THE FIRM ALSO FAILED TOESTABLISH, MAINTAIN AND/OR ENFORCE A SUPERVISORY SYSTEM ANDWRITTEN SUPERVISORY PROCEDURES THAT WERE REASONABLYDESIGNED TO ENSURE THE FAIRNESS OF PRICES IN PRINCIPALTRANSACTIONS WITH CUSTOMERS. THE FIRM'S SUPERVISORY SYSTEMAND WRITTEN SUPERVISORY PROCEDURES WERE NOT REASONABLYDESIGNED TO ENSURE THAT PRICES AT WHICH IT SOLD DEBT SECURITIESTO CUSTOMERS IN PRINCIPAL TRANSACTIONS WERE FAIR ANDREASONABLE, NOR DESIGNED TO ACHIEVE COMPLIANCE WITH ALLAPPLICABLE LAWS, RULES AND REGULATIONS PERTAINING TO EFFECTINGPRINCIPAL TRANSACTIONS WITH CUSTOMERS. THE FIRM'S WRITTENSUPERVISORY PROCEDURES IN EFFECT DID NOT ADDRESS OR DISCUSS,TO ANY MATERIAL EXTENT, INTERPRETATIVE MATERIAL-2440-1 ORINTERPRETATIVE MATERIAL-2440-2 AND DID NOT CONTAIN PROCEDURESFOR WEIGHING OR APPLYING, INCLUDING HOW TO WEIGH OR APPLY, THEVARIOUS FACTORS SET FORTH IN THOSE PROVISIONS IN REVIEWING ANDEVALUATING THE FAIRNESS OF PRICES IN PRINCIPAL TRANSACTIONSWITH CUSTOMERS. THE FIRM'S PROCEDURES ALSO DID NOT ADDRESSHOW SUPERVISORY REVIEWS OF MARKUPS AND MARKDOWNS INPRINCIPAL TRANSACTIONS WITH CUSTOMERS WOULD BE CONDUCTED.


Resolution:


No









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED, FINED $43,121.39, AND ORDERED TOPAY $43,121.39, PLUS INTEREST, IN RESTITUTION TO A CUSTOMER. AREGISTERED PRINCIPAL ON BEHALF OF THE FIRM SHALL SUBMITSATISFACTORY PROOF OF PAYMENT OF RESTITUTION OR OFREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION TO FINRA NO LATER THAN 120 DAYS AFTER THE DATE OFACCEPTANCE OF THE AWC.IF FOR ANY REASON RESPONDENT CANNOT LOCATE THE CUSTOMERAFTER REASONABLE AND DOCUMENTED EFFORTS WITHIN 120 DAYSFROM THE DATE THE AWC IS ACCEPTED, OR SUCH ADDITIONAL PERIODAGREED TO BY FINRA IN WRITING, RESPONDENT SHALL FORWARD ANYUNDISTRIBUTED RESTITUTION AND INTEREST TO THE APPROPRIATEESCHEAT, UNCLAIMED PROPERTY OR ABANDONED PROPERTY FUND FORTHE STATE IN WHICH THE CUSTOMER IS LAST KNOWN TO HAVE RESIDEDOR HAVE BEEN DOMICILED. RESPONDENT SHALL PROVIDE SATISFACTORYPROOF OF SUCH ACTION TO THE FINRA WITHIN 14 DAYS OF FORWARDINGTHE UNDISTRIBUTED RESTITUTION AND INTEREST TO THE APPROPRIATESTATE AUTHORITY. FINE PAID IN FULL ON JULY 2, 2012.


No

Sanctions Ordered: CensureMonetary/Fine $43,121.39Disgorgement/Restitution


Initiated By: FINRA



Allegations: FINRA ALLEGED THE FIRM CHARGED EXCESSIVE MARK-UPS ON SEVERALCORPORATE BOND TRANSACTIONS AND FAILED TO MAINTAIN ANDENFORCE A REASONABLE SUPERVISORY SYSTEM IN CONNECTION WITHSUCH TRANSACTIONS IN VIOLATION OF NASD RULES 2110, 2440 AND 3010.








Other


N/A

Principal Product Type: Debt - Corporate



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM AGREEDTO REIMBURSE THE CUSTOMER $43,121.39 PLUS INTEREST ANDCONSENTED TO A CENSURE AND PAYMENT OF A FINE IN THE AMOUNT OF$43,121.39.

Sanctions Ordered: CensureMonetary/Fine $43,121.39Disgorgement/Restitution


Disclosure 9 of 14

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Allegations: NASD RULES 2110, 2210, 2210(B), 3010 - NFP SECURITIES, INC. APPROVEDADVERTISING MATERIALS USED BY A REGISTERED REPRESENTATIVE INHIS RETAIL EQUITY INDEXED ANNUITY (EIA) BUSINESS HE CONDUCTED ATSEMINARS FOR SENIOR CITIZENS THAT CONTAINED FALSE,EXAGGERATED, UNWARRANTED OR MISLEADING STATEMENTS. THE FIRMFAILED TO DOCUMENT WITH THE SIGNATURE OR INITIAL OF A PRINCIPALITS APPROVAL OF A PIECE OF ADVERTISING MATERIAL USED BY THEREPRESENTATIVE AND FAILED TO MAINTAIN A RECORD OF ITS APPROVALOF ONE PIECE OF THE REPRESENTATIVE'S ADVERTISING MATERIAL. THEFIRM DID NOT SUPERVISE THE REPRESENTATIVE'S WORKSHOPS AND DIDNOT REQUIRE HIM TO PRODUCE A COPY OF THE SCRIPT FOR THEWORKSHOPS AND DID NOT ATTEND ANY OF THE WORKSHOPS TOCONFIRM THAT THE CONTENTS OF THE WORKSHOPS COMPLIED WITHNASD RULES AND THAT ONLY FIRM-APPROVED MATERIALS WERE BEINGUSED. IF IT HAD REQUIRED THE REPRESENTATIVE TO SUBMIT A SCRIPTAND HAD ATTENDED HIS WORKSHOPS, IT WOULD HAVE DISCOVEREDTHAT HE MADE STATEMENTS, USED MATERIALS AND ENGAGED INCONDUCT THAT VIOLATED NASD RULES 2210 AND 2110 AND COULD HAVEPREVENTED FURTHER VIOLATIONS OF THESE RULES.







Initiated By: FINRA






Other Product Type(s): ADVERTISING MATERIALS, EQUITY-INDEXED ANNUITIES

NASD RULES 2110, 2210, 2210(B), 3010 - NFP SECURITIES, INC. APPROVEDADVERTISING MATERIALS USED BY A REGISTERED REPRESENTATIVE INHIS RETAIL EQUITY INDEXED ANNUITY (EIA) BUSINESS HE CONDUCTED ATSEMINARS FOR SENIOR CITIZENS THAT CONTAINED FALSE,EXAGGERATED, UNWARRANTED OR MISLEADING STATEMENTS. THE FIRMFAILED TO DOCUMENT WITH THE SIGNATURE OR INITIAL OF A PRINCIPALITS APPROVAL OF A PIECE OF ADVERTISING MATERIAL USED BY THEREPRESENTATIVE AND FAILED TO MAINTAIN A RECORD OF ITS APPROVALOF ONE PIECE OF THE REPRESENTATIVE'S ADVERTISING MATERIAL. THEFIRM DID NOT SUPERVISE THE REPRESENTATIVE'S WORKSHOPS AND DIDNOT REQUIRE HIM TO PRODUCE A COPY OF THE SCRIPT FOR THEWORKSHOPS AND DID NOT ATTEND ANY OF THE WORKSHOPS TOCONFIRM THAT THE CONTENTS OF THE WORKSHOPS COMPLIED WITHNASD RULES AND THAT ONLY FIRM-APPROVED MATERIALS WERE BEINGUSED. IF IT HAD REQUIRED THE REPRESENTATIVE TO SUBMIT A SCRIPTAND HAD ATTENDED HIS WORKSHOPS, IT WOULD HAVE DISCOVEREDTHAT HE MADE STATEMENTS, USED MATERIALS AND ENGAGED INCONDUCT THAT VIOLATED NASD RULES 2210 AND 2110 AND COULD HAVEPREVENTED FURTHER VIOLATIONS OF THESE RULES.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $50,000.


No




Initiated By: FINANICAL INDUSTRY REGULATORY AUTHORITY



Allegations: ALLEGED VIOLATIONS OF FINRA RULES 2110, 2210(B), 2210(D), AND 3010WITH RESPECT TO ADVERTISING AND SEMINARS OF A FORMERREPRESENTATIVE. WITHOUT ADMITTING OR DENYING THE UNDERLYINGALLEGATIONS, THE FIRM AGREED TO ACCEPT A CENSURE AND PAY A FINEOF $50,000.













Other Product Type(s): EQUITY INDEX ANNUITIES


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE UNDERLYING ALLEGATIONS, THEFIRM AGREED TO ACCEPT A CENSURE AND PAY A FINE OF $50,000.



Disclosure 10 of 14

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Initiated By: FINRA




Principal Product Type: Debt - Municipal


Allegations: MSRB RULE G-14 - NFP SECURITIES, INC. FAILED TO REPORTINFORMATION REGARDING PURCHASE AND SALE TRANSACTIONSEFFECTED IN MUNICIPAL SECURITIES TO THE REAL TIME TRANSACTIONREPORTING SYSTEM (RTRS) IN THE MANNER PRESCRIBED BY RULE G-14RTRS PROCEDURES AND THE RTRS USERS MANUAL. THE FIRM FAILED TOREPORT INFORMATION ABOUT THE TRANSACTIONS WITHIN 15 MINUTESOF TIME OF TRADE TO AN RTRS PORTAL; FAILED TO REPORT THECORRECT TIME OF EXECUTION TO THE RTRS IN REPORTS OF MUNICIPALSECURITIES TRANSACTIONS; AND THE FIRM IMPROPERLY REPORTEDINFORMATION TO THE RTRS IT SHOULD NOT HAVE.










Resolution:




No




Initiated By: FINRA


Other



Principal Product Type: Debt - Municipal


Allegations: MSRB RULE G-14 - NFP SECURITIES, INC. FAILED TO REPORTINFORMATION REGARDING PURCHASE AND SALE TRANSACTIONSEFFECTED IN MUNICIPAL SECURITIES TO THE REAL TIME TRANSACTIONREPORTING SYSTEM (RTRS) IN THE MANNER PRESCRIBED BY RULE G-14RTRS PROCEDURES AND THE RTRS USERS MANUAL. THE FIRM FAILED TOREPORT INFORMATION ABOUT THE TRANSACTIONS WITHIN 15 MINUTESOF TIME OF TRADE TO AN RTRS PORTAL; FAILED TO REPORT THECORRECT TIME OF EXECUTION TO THE RTRS IN REPORTS OF MUNICIPALSECURITIES TRANSACTIONS; AND THE FIRM IMPROPERLY REPORTEDINFORMATION TO THE RTRS IT SHOULD NOT HAVE.








Other


OTHER SANCTIONS/RELIEF SOUGHT:


Resolution:





Disclosure 11 of 14

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Initiated By: FINRA




Docket/Case Number: E062005012702



Allegations: NASD RULES 2110, 3070, FINRA BY-LAW ARTICLE V, SECTION 3 -RESPONDENT MEMBER FAILED TO TIMELY FILE UNIFORM TERMINATIONNOTICES FOR SECURITIES INDUSTRY REGISTRATION (FORM U5) ANDFAILED TO FILE ACCURATE AND TIMELY REPORTS WITH FINRA PURSUANTTO NASD RULE 3070.



Resolution:


No






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E062005012702



Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, NFP SECURITIES, INC.,CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM IS CENSURED AND FINED $12,000.


No



Initiated By: FINRA


Other






Allegations: MEMBER FAILED TO TIMELY FILE UNIFORM TERMINATION NOTICES FORSECURITIES INDUSTRY REGISTRATION (FORM U5) AND FAILED TO FILEACCURATE AND TIMELY REPORTS WITH FINRA PURSUANT TO NASD RULE3070.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, NFP SECURITIES, INC.,CONSENTED TO A CENSURE AND FINE OF $12,000.







https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E062005012702


Disclosure 12 of 14

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Initiated By: NASD






Other Product Type(s): UNSPECIFIED TYPE OF SECURITIES

Allegations: SEC RULE 17A-3(1), NASD RULES 2110, 3010(D), 3110 - RESPONDENTMEMBER FAILED TO EVIDENCE ITS ENDORSEMENT, BY A REGISTEREDPRINCIPAL IN WRITING, OF SECURITIES TRANSACTIONS; FAILED TO MAKEAND KEEP CURRENT ITS BLOTTER FOR CHECKS RECEIVED ANDFORWARDED; FAILED TO TO MAKE AND KEEP CURRENT ITS BOTTLER FORPURCHASES AND SALES OF SECURITIES AND FAILED TO MAINTAIN ANACCURATE CHECKS RECEIVED AND FORWARDED BLOTTER.



Resolution:




No



iReporting Source: 47©2020 FINRA. All rights reserved. Report about KESTRA INVESTMENT SERVICES, LLC






Initiated By: NASD






Other Product Type(s): UNSPECIFIED TYPE OF SECURITIES

Allegations: SEC RULE 17A-3(1), NASD RULES 2110, 3010(D), 3110 - RESPONDENTMEMBER FAILED TO EVIDENCE ITS ENDORSEMENT, BY A REGISTEREDPRINCIPAL IN WRITING, OF SECURITIES TRANSACTIONS; FAILED TO MAKEAND KEEP CURRENT ITS BLOTTER FOR CHECKS RECEIVED ANDFORWARDED; FAILED TO MAKE AND KEEP CURRENT ITS BLOTTER FORPURCHASES AND SALES OF SECURITIES AND FAILED TO MAINTAIN ANACCURATE CHECKS RECEIVED AND FORWARDED BLOTTER.



Resolution:





Disclosure 13 of 14

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Allegations: NASD RULES 2110, 2210(C), 2210(D)(1)(A)AND (B), IM-2210-2(A) -RESPONDENT MEMBER FAILED TO FILE ADVERTISEMENTS AND PIECES OFSALES LITERATURE WITH NASD'S ADVERTISING REGULATIONDEPARTMENT; APPROVED FOR USE, PUBLISHED, AND DISTRIBUTEDADVERTISEMENTS AND SALES LITERATURE THAT WERE MISLEADINGBECAUSE THEY SUGGESTED THAT INDIVIDUALS PURCHASING VARIABLEANNUITIES THROUGH THE FIRM AND ONE OF ITS RETAIL SALES OFFICESWOULD PAY NO FEES WHEN, IN FACT, THEY WOULD; APPROVED FOR USEAND DISTRIBUTION TO PUBLIC CUSTOMERS AND PROSPECTS PIECES OFSALES LITERATURE THAT DESCRIBED A VARIABLE ANNUITY AND THEPRODUCT'S BENEFITS BUT FAILED TO PRESENT A BALANCEDDISCUSSSION OF THE PRODUCT AND OMITTED INFORMATION REGARDINGCOSTS, RISKS, AND RESTRICTIONS; AND ONE OSJ OF THE FIRMPRODUCED ALL OF THE ADVERTISMENTS AND SALES LITERATUREDESCRIBED.







Initiated By: NASD




Docket/Case Number: CAF040024


Other Product Type(s): ADVERTSIEMENTS, SALES LITERATURE

NASD RULES 2110, 2210(C), 2210(D)(1)(A)AND (B), IM-2210-2(A) -RESPONDENT MEMBER FAILED TO FILE ADVERTISEMENTS AND PIECES OFSALES LITERATURE WITH NASD'S ADVERTISING REGULATIONDEPARTMENT; APPROVED FOR USE, PUBLISHED, AND DISTRIBUTEDADVERTISEMENTS AND SALES LITERATURE THAT WERE MISLEADINGBECAUSE THEY SUGGESTED THAT INDIVIDUALS PURCHASING VARIABLEANNUITIES THROUGH THE FIRM AND ONE OF ITS RETAIL SALES OFFICESWOULD PAY NO FEES WHEN, IN FACT, THEY WOULD; APPROVED FOR USEAND DISTRIBUTION TO PUBLIC CUSTOMERS AND PROSPECTS PIECES OFSALES LITERATURE THAT DESCRIBED A VARIABLE ANNUITY AND THEPRODUCT'S BENEFITS BUT FAILED TO PRESENT A BALANCEDDISCUSSSION OF THE PRODUCT AND OMITTED INFORMATION REGARDINGCOSTS, RISKS, AND RESTRICTIONS; AND ONE OSJ OF THE FIRMPRODUCED ALL OF THE ADVERTISMENTS AND SALES LITERATUREDESCRIBED.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, NFP SECURITIES,INC. CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM WAS CENSURED AND FINED $25,000.


No




Allegations: VIOLATIONS OF NASD RULES IN CONNECTION WITH ADVERTISING ANDSALES LITERATURE CREATED AND PUBLISHED BY AN OFFICE OF THEFIRM THAT ALLEGEDLY CONTAINED MISLEADING INFORMATION, FAILED TOPRESENT A BALANCED DISCUSSION, OMITTED INFORMATION REGARDINGCOSTS AND RISKS, AND, WHILE REQUIRED, WAS NOT FILED WITH THENASD.







Initiated By: NASD


Censure


FINE


Docket/Case Number: CAF040024



Allegations: VIOLATIONS OF NASD RULES IN CONNECTION WITH ADVERTISING ANDSALES LITERATURE CREATED AND PUBLISHED BY AN OFFICE OF THEFIRM THAT ALLEGEDLY CONTAINED MISLEADING INFORMATION, FAILED TOPRESENT A BALANCED DISCUSSION, OMITTED INFORMATION REGARDINGCOSTS AND RISKS, AND, WHILE REQUIRED, WAS NOT FILED WITH THENASD.


Resolution:


Sanction Details: FINE OF $25,000 PAID BY THE APPLICANT ON MARCH 18, 2004.

Firm Statement EFFECTIVE MARCH 18, 2004, THE NASD ACCEPTED A LETTER OFACCEPTANCE, WAIVER AND CONSENT SUBMITTED BY THE FIRM INCONNECTION WITH ALLEGED ADVERTISING RULE VIOLATIONS. THE FIRM,WITHOUT ADMITTING OR DENYING THE UNDERLYING ALLEGATIONS,AGREED TO ACCEPT A CENSURE AND PAY A FINE IN THE AMOUNT OF$25,000.



Disclosure 14 of 14

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Allegations: ON 4/27/00, PARTNERS SECURITIES (NOW KNOW AS NFP SECURITIES,INC.) ENTERED INTO A STIPULATION & CONSENT AGREEMENT WITH THESTATE OF FLORIDA, DEPT OF BANKING & FINANCE, DIV OF SECURITIES &INVESTOR PROTECTION RESOLVING & CONCLUDING ADMINISTRATIVEPROCEEDING 2942-S-2/00. THE STATE FINED PARTNERS SECURITIES$10,000 FOR FAILURE TO PROPERLY AND/OR TIMELY REGISTER SOMEBRANCH LOCATIONS IN FLORIDA IN 1999. PARTNERS SECURITIESNEITHER ADMITTED NOR DENIED THE ALLEGATIONS BUT CONSENTED TOTHE FINDINGS. AT THE CONCLUSION OF THE ORDER, ALL PENDINGBRANCHES RECEIVED REGISTRATION APPROVAL FROM THE STATE.







Initiated By: STATE OF FLORIDA, DEPT OF BANKING & FINANCE, DIV OF SECURITIES.





Docket/Case Number: 2942-S-2/00



ON 4/27/00, PARTNERS SECURITIES (NOW KNOW AS NFP SECURITIES,INC.) ENTERED INTO A STIPULATION & CONSENT AGREEMENT WITH THESTATE OF FLORIDA, DEPT OF BANKING & FINANCE, DIV OF SECURITIES &INVESTOR PROTECTION RESOLVING & CONCLUDING ADMINISTRATIVEPROCEEDING 2942-S-2/00. THE STATE FINED PARTNERS SECURITIES$10,000 FOR FAILURE TO PROPERLY AND/OR TIMELY REGISTER SOMEBRANCH LOCATIONS IN FLORIDA IN 1999. PARTNERS SECURITIESNEITHER ADMITTED NOR DENIED THE ALLEGATIONS BUT CONSENTED TOTHE FINDINGS. AT THE CONCLUSION OF THE ORDER, ALL PENDINGBRANCHES RECEIVED REGISTRATION APPROVAL FROM THE STATE.


Resolution:


Sanction Details: FINE OF $10000 PAID VIA STATE OF FLORIDA'S ACCEPTANCE OF THE FINALORDER ON 4/27/00.

Sanctions Ordered: Monetary/Fine $10,000.00

Stipulation and Consent






Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 2


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

FINRA

08/30/2012

12-03093

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER

OTHER TYPES OF SECURITIES

$3,397,490.00

AWARD AGAINST PARTY

07/07/2015

$240,600.00

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.

Disclosure 2 of 2

i


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


FINRA

02/19/2013

13-00430

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

ANNUITIES; MUNICIPAL BONDS; MUTUAL FUNDS; REAL ESTATEINVESTMENT TRUST 52©2020 FINRA. All rights reserved. Report about KESTRA INVESTMENT SERVICES, LLC




www.finra.org/awardsonline

https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=12-03093

https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=13-00430



Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

ANNUITIES; MUNICIPAL BONDS; MUTUAL FUNDS; REAL ESTATEINVESTMENT TRUST

$1,900,000.01

AWARD AGAINST PARTY

06/11/2014

$1,246,155.02

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.






End of Report

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