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Maxim Group: Do You Know About their Regulatory Actions and Fines?

Securities Lawyer Jonathan Kurta
By: Jonathan Kurta Author
April 17, 2023 at 6:45pm

Maxim Group (CRD #: 120708), a brokerage firm with headquarters in New York, New York, has regulatory actions and fines on its public BrokerCheck record that investors should consider. These include allegations that the brokerage firm failed to supervise its brokers. Failure to supervise may result in unsuitable investment recommendations and unnecessary losses for investors.

Maxim Group has also operated under the following names:

  • M-Vest
  • Maxim Merchant Capital
  • Maxim Group LLC

Maxim Group also offers the following securities:

Can I Sue Maxim Group?

Yes, you can recover losses following brokerage fraud or misconduct. If you lost money while working with a broker from Maxim Group, you should reach out to a securities attorney. However, you may not be able to recover losses through a civil suit. Typically, investment contracts include pre-dispute arbitration clauses, which require investors to use FINRA arbitration to recover their losses. FINRA arbitration is different from a civil suit and securities lawyers can offer expert insights into the process.

Securities Lawyer Jonathan Kurta
Written by: Jonathan Kurta

Jonathan Kurta is an accomplished securities attorney and a founding partner at Kurta Law.

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Conflicts of Interest

Regulation Best Interest requires brokerage firms to disclose any conflicts of interest in the Customer Relationship Summary Form (Form CRS). The Form CRS recommends that investors ask their Maxim Group broker: “How will you choose investments to recommend me?” As their conflicts of interest statement shows, brokers have the incentive to recommend certain financial products over others.

Maxim Group may receive third-party payments for the following products:

  • Mutual Funds
  • Exchange-Traded Funds
  • Alternative Investments

Conflicts of interest could also include revenue-sharing agreements or revenue-sharing payments the firm receives from the clearing firm, Pershing LLC. Maxim also makes money by principal trading, where investors purchase investments from the brokerage firm’s own accounts.

Conflicts of Interest for Brokers

Brokers have their own conflicts of interest that investors should consider. It is wise to enquire about the broker’s financial incentives before agreeing to an investment strategy.

  • Maxim Group brokers receive transaction-based compensation. This creates an incentive for brokers to encourage investors to trade as much as possible.
  • Brokers may receive compensation depending on the type of investment sold.

Brokerage Fees

Maxim Group Form CRS discloses fees investors will pay and advises investors, “Please make sure you understand what fees and costs you are paying.”

  • Transaction-based fees following the execution of securities
  • “Sales Loads” for Mutual Funds
  • Custodian Fees
  • Account Maintenance Fees

Regulatory Actions

Read the following recent regulatory actions from Maxim Group. There are a total of 32 regulatory events on their public record, according to their detailed BrokerCheck record.

New York Stock Exchange Fine

On February 6, 2023, Maxim Group consented to the findings that it did not establish a supervisory system designed to comply with New York Stock Exchange ARCA rules. FINRA further alleged that Maxim Group did not conduct ongoing reviews of existing trading employees’ registration status with the exchange. As a result, the firm allegedly did not properly register four of its associated persons as securities traders with the exchange.

As part of the terms of the Acceptance, Waiver, and Consent agreement, the firm consented to a $4,000 fine.

Maxim Group Pays Fines Following Losses for Customers

On August 4, 2021, Maxim Group consented to the findings that it traded for its own account at prices that would have satisfied outstanding customer orders. Afterward, the firm executed the orders at the customer limit price, instead of the price it had enjoyed for its own account. This resulted in a small loss for customers.

As part of the terms of the AWC, The firm consented to repay customers and pay an additional $65,000 fine to FINRA.

Unit Investment Trusts Allegedly Led to Excess Payments of $167,780.49

In October 2018, the firm consented to the findings that it failed to establish and maintain a supervisory system designed to detect and prevent unsuitable short-term trading in Unit Investment Trusts. The firm allegedly did not provide brokers with any training on UITs. As a result, several representatives allegedly recommended that customers sell UITs with two-year maturity dates after less than a year. The brokers allegedly recommended the investors purchase new UITs, resulting in unnecessary sales charges. The customers allegedly paid excess sales charges of approximately $167,780.49.

The firm paid restitution of $167,780.49 in addition to a $65,000 fine, as part of the terms of the AWC.

What Should I Do if I Lost Money?

We Offer Free Case Evaluations.

Call (877) 600-0098 or email info@kurtalawfirm.com.