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Western International Securities

Kurta Law is investigating Western International Securities and potential misconduct allegations levied against its representatives. Keep reading if you have lost money working with a Western International broker.

Western International Securities (CRD #: 39262) is registered as both a brokerage firm and an investment advisory firm. The firm was first registered in 1995. Its main address is in Pasadena, California.

Western International Securities offers a range of securities, including but not limited to:

Western International has disclosed that the range of investment options available to them will depend on their broker’s type of license.

Fees Associated with Brokerage Services and Conflicts of Interest

Western International Securities discloses the following fees and conflicts of interest in its Customer Relationship Summary (Form CRS).

These are only fees associated with brokerage services. There are separate fees for advisory services. Make sure you know what type of account you have and what type of financial professional you are working with.

Brokerage services come with transaction-based fees. These are also called commissions. Because they are per-transaction charges, your broker has an incentive to encourage you to trade more often.
Investments in stocks and ETFs come with a transaction-based fee that is usually charged as a separate commission. Bonds come with transaction fees called “markups” or “markdowns.”
Products like mutual funds, annuities, and alternative investments come with sales charges imposed by the product sponsors. These charges create an incentive for brokers to recommend these products over others.
You may also pay investment-specific fees for the administration of alternative investments and foreign securities.
ETFs and mutual funds come with asset-based fees.

Regulatory Actions

Investors should be aware of Western International Securities’ history of regulatory actions. These are only the three most recent – the detailed BrokerCheck record contains details for all 18 of the disclosures.

$400,000 Fine Following Allegations Regarding Non-Traded REITs and Failure to Report Customer Complaints

Western International Securities entered into an Acceptance, Waiver, and Consent agreement (AWC) with the Financial Industry Regulatory Authority (FINRA) on November 1, 2022. An AWC allows firms to settle with FINRA without admitting or denying the findings.

According to the AWC, Western International Securities failed to reasonably supervise its non-traded REIT business. Non-traded REITs are illiquid products that can come with higher risks. “Illiquid” means that investors may not be able to cash out of their investment without paying heavy fees. Non-traded REITs are especially risky because they do not trade on a public exchange, making it impossible for investors to easily sell their shares.

The AWC alleges that a Western International Securities representative recommended 81 purchases of non-traded REITs that totaled more than $7.8 million to 59 firm customers. Allegedly, the broker had no reason to believe these investments would suit the investors’ needs.

Many of the investors were seniors who allegedly surrendered variable annuities to purchase REITs. These types of exchanges can be costly and may not benefit the investor.

In certain years, the commissions from non-traded REITs allegedly made up 90% of the broker’s commissions.
This broker had allegedly been the subject of sales practice complaints before and during their association with Western International.

Supervision

FINRA Rule 3110 requires that firms establish supervisory systems to ensure their compliance with securities regulations. Firms must appoint supervisors and provide them with Written Supervisory Procedures (WSPs) to follow. Supervision should include evaluating REIT recommendations to make sure they suit investors’ needs.

Real Estate Investment Trusts

A real estate investment trust (REIT) allows investors to pool their funds together in a portfolio of real estate and earn returns without the responsibility of managing the properties themselves.

Terms of the AWC

As part of the terms of the AWC, Western International consented to a $400,000 fine.

You can read a copy of the AWC here.

Alleged Failure to Report Customer Complaints

Between 2015 and 2022, Western International Securities allegedly failed to report 45 written customer complaints.

Terms of the AWC

As part of the terms of the AWC, Western International Securities consented to a censure and a $400,000 fine, in addition to a restitution payment of $471,401.57 plus interest.

You can read a copy of the AWC here.

Failure to Report Brokers’ Liens, Judgments and Bankruptcies

According to an AWC from May 4, 2020, Western International failed to disclose 163 liens, judgments, and/or bankruptcies of its registered representatives.

Firms are required to update their brokers’ Forms U4 to disclose financial events like liens, judgments, and bankruptcies. These disclosures appear on FINRA BrokerCheck, which is meant to provide transparency for investors.

You can read a copy of the AWC here.

Alleged $305,000 Overcharge of Mutual Fund Customers

On July 16, 2019, Western International Securities consented to an AWC’s findings that its failure to supervise led to investors overpaying for mutual fund purchases.

Western International allegedly failed to supervise its brokers’ sales recommendations of mutual funds to ensure customers received all the applicable sales charge waivers. Class A shares of mutual funds often offer “breakpoint” discounts, while other shares classes of mutual funds do not. Upon review, Western International allegedly discovered that approximately 40 customers’ accounts purchased mutual fund shares and did not have the applicable sales charge waiver applied. Western estimated that customers allegedly overpaid by approximately $305,000 for their mutual fund purchases.

Terms of the AWC

Western International agreed to repay their customers and to pay a FINRA fine of $75,000.

You can read a copy of the AWC here.