Did Your R.F. Lafferty & Co. Broker Recommend GWG Holdings L Bonds?
Kurta Law is interested in speaking to clients of R.F. Lafferty & Co. who purchased L Bonds issued by GWG Holdings. GWG Holdings has halted payments to investors and is currently the subject of an SEC investigation. Stockbrokers with R.F. Lafferty may have recommended unsuitable L Bonds due to a conflict of interest — broker Richard Belz is facing allegations that he recommended unsuitable L Bonds. Call (877) 600-0098 or email email@example.com for a free consultation with an investment lawyer.
About R.F. Lafferty & Co.
R.F. Lafferty & Co. is a brokerage firm based in New York City, New York. According to their site, Ralph F. Lafferty founded the firm in 1946. The firm has operated under the names Fulcrum Group, Scarsdale Group, and Kern Suslow.
R.F. Lafferty & Co. offers the following products:
- Fixed income asset classes
- OTC Securities (Penny stocks)
- Mutual funds
- Variable life insurance
- Private placements
- Life, disability, and long-term care insurance
Conflicts of Interest
R.F. Lafferty & Co.’s Client Relationship Summary (Form CRS) states: “Our financial professionals are compensated based on the types of products sold. This means your financial professional has an incentive to recommend certain products based on the compensation he or she will receive.”
As an investor, you should always ask your broker if they have any conflicts of interest. For example, your stockbroker may invest in a security that the firm offers, creating an incentive for them to recommend that security. Investors should also ask about their stockbroker’s commissions. Higher commissions mean a higher likelihood that the broker will recommend a security that is too high-risk to fit their investor’s needs.
R.F. Lafferty & Co. has seven regulatory disclosures on its BrokerCheck record. These disclosures include fines that FINRA imposed following allegations that the firm did not do enough to supervise its brokers.
Solicited vs. Unsolicited Trades
On December 11, 2020, R.F. Lafferty & Co. entered into an Acceptance, Waiver, and Consent agreement (AWC) with FINRA in which they consented to the findings that the firm failed to maintain accurate information as to whether trades were solicited or unsolicited. “Solicited” means the broker suggested the trade to the investor. Firms need to know which trades were solicited so that they can scrutinize their suitability. Furthermore, FINRA Rule 4511 requires firms to make and maintain accurate records.
According to the AWC, R.F. Lafferty relied on records generated by its clearing firms, and one of the firm’s clearing houses regularly left the field blank. FINRA alleges that when supervisors at R.F. Lafferty became aware of the unmarked trades, they would consider them unsolicited for the purposes of supervisory review.
As part of the terms of the AWC, R.F. Lafferty consented to a fine of $55,000.
On October 9, 2015, R.F. Lafferty consented to the findings that is did not follow FINRA rules for reporting corporate debt securities trades.
The firm consented to a fine of $5,000.
FINA Rule 3110: Supervisory Requirements
On November 25, 2013, R.F. Lafferty consented to the findings that the firm did not have a supervisory system designed to achieve compliance with securities laws and/or FINRA and SEC rules regarding best execution. (Brokers are required to execute trades at the possible price for their client.)
FINRA Rule 3110 requires firms to supervise their stockbrokers and ensure they comply with securities laws and FINRA rules.
R.F. Lafferty consented to a fine of $22,000.
Anti-Money Laundering Rules
According to a disclosure dated March 11, 2013, R.F. Lafferty & Co. failed to develop internal controls to detect suspicious transactions. Under FINRA Rule 3310, firms are required to report suspicious transactions that could be connected to illegal money laundering.
FINRA’s findings allege that shortly after opening accounts, two customers transferred millions of penny stock shares issued by companies “with questionable operating histories.” They then liquidated their positions and wired the $7.3 million in proceeds from the accounts. This type of trading is a red flag for money laundering.
FINRA alleges that due to the firm’s failure to implement an anti-money laundering compliance program it did not detect suspicious activities that should have been investigated.
As a result of the findings, R.F. Lafferty & Co. consented to a fine of $50,000.
Kurta Law Can Help
If you lost money on unsuitable recommendations sold to you by R.F. Lafferty & Co. representatives—either GWGH L Bonds or other risky securities—contact Kurta Law for a free case evaluation today. Brokerage firms often require investors to sign a pre-dispute arbitration clause, meaning that investors must resolve disputes through FINRA arbitration rather than a civil suit. Investment lawyers at Kurta Law can help you receive a fair settlement or FINRA award as quickly as possible.