FINRA Fines Coastal Equities over ETF Sales

Coastal Equities fined $15,000.

In June 2017, the Financial Industry Regulatory Authority (FINRA) announced that Coastal Equities Inc. of Wilmington, Delaware, submitted an acceptance, waiver and consent letter, or AWC, regarding its failure to supervise firm sales of non-traditional ETFs, or exchange-traded funds. The firm was censured and fined $15,000.

FINRA’s allegations against Coastal Equities Inc. concerned the firm’s lack of controls and oversight in the sale of multiple types of exchange-traded funds. ETFs are liquid, and are traded like stock on the exchange. Coastal Equities Inc. is supposed to have procedures in place to require that every new product offered and sold is understood by their brokers. According to FINRA, Coastal Equities failed to implement and enforce such written procedures.

Coastal Equities was not able to ensure that their brokers knew the risks of the ETFs, or were able to track how well the products were performing on the market. The AWC stated that the firm did not properly document whether the brokers gave the customers notice of the risks associated with the product. Because the firm did not effectively record its activities surrounding these funds, FINRA found there was ow way to ensure the clients were given sufficient information regarding the risks of the ETFs

Registration and disciplinary history

In order to lawfully sell investments to the public, a firm must either be registered or exempt from registration.  Coastal Equities Inc. is a Delaware corporation formed in 1989 and registered with FINRA, the SEC and 52 states/territories.

According to FINRA’s CRD disclosure report, Coastal Equities Inc. has been the subject of three regulatory investigations.

The Law Office of David Liebrader practices exclusively in the field of investment loss recovery.  For the past 23 years, we have dedicated our law practice to assisting investors who have been victims of investment fraud via unlawful and unsuitable investment transactions.  During that time, we have recovered money for over one thousand individuals, pension plans, trusts and companies.  The recoveries we have obtained via judgments, awards and settlements on behalf of our clients exceed $40,000,000.

When investors contact our firm, they can expect prompt attention and a detailed analysis of their issues.  Typical claims that we are asked to review  involve “unsuitability (where a financial advisor makes investment recommendations that are inconsistent with a customer’s investment objectives), claims for “churning” (where a broker enters into an excessive number of trades for the purpose of generating commissions), claims involving illiquid investments such as private placements (I.e., real estate investment trusts, limited partnerships, equipment leasing and oil and gas drilling programs) as well as claims for violations of state securities laws, which often provide investors remedies like attorney’s fees and interest, if they are successful on the claim.

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