Janney Montgomery Scott Regulatory Fines
The firm’s detailed BrokerCheck record reveals 120 disclosures, including fines from state regulators as well as the Financial Industry Regulatory Authority.
Here are three recent disclosures that investors should review if they plan to invest with Janney Montgomery Scott.
1. Alleged Failure to Supervise
According to an Acceptance, Waiver, & Consent agreement (AWC) with the Investor Protection Unit of the Delaware Department of Justice, on February 26, 2020, an investor alleged that Janney Montgomery Scott failed to supervise one of its representatives. FINRA Rule 3110 requires that brokers supervise their representatives and doublecheck that their recommendations suit their investors’ needs. FINRA alleges that the broker engaged in unsuitable trading activity that resulted in unnecessary commissions charged to three clients.
As part of the terms of the AWC, Janney Montgomery consents to pay a fine and disgorgement of $40,000. The firm also consented to a period of heightened supervision for one year.
2. Allegedly Unsuitable Energy Investments
Janney Montgomery representatives allegedly recommended unsuitable energy-sector securities. The AWC from October 19, 2022, states that the representatives recommended that the investors purchase additional energy-sector securities even after their accounts were already concentrated in that sector. Overconcentration violates FINRA Rule 2111, which requires brokers to recommend suitable investment strategies. Overconcentration is not usually a suitable investment strategy because it exposes investors to too much risk. If the energy sector suffers, an overconcentrated investment portfolio will suffer unnecessarily heavy losses.
The recommendations allegedly generated alerts, but the firm allegedly failed to take reasonable steps to review the energy investments’ suitability.
Janney Montgomery agreed to pay $100,000 as part of a monetary fine in addition to $144,019 in restitution to the investors.
3. Alleged Failure to Supervise Leads to Loss for Elderly Client’s Estate
According to a Consent Agreement dated October 21, 2020, Janney Montgomery failed to note numerous red flags related to the activities of one of its brokers. This broker allegedly acted in his own best interest when it came to the management of an elderly client’s estate. Allegedly, the firm paid $108,459.68 to the estate of the client who suffered financial harm.
These alleged failures are also violations of FINRA Rule 3110.
Janney Montgomery consented to pay $100,000 as an administrative fine and $50,000 to reimburse the agency for investigative costs.