FINRA fines GMS Group Over ETF Sales

GMS Group fined by FINRA


In December, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that The GMS Group of Livingston, NJ submitted an acceptance, waiver and consent letter regarding its sales of exchange traded funds (ETFs), and the firm’s failure to effectively implement a reasonable supervisory system designed to achieve compliance with the securities laws. In agreeing to the AWC, the firm was fined $75,000.

FINRA’s allegations against The GMS Group concerned the sales of ETFs, and the firm’s failure to take action on numerous “red flags” indicating unsuitable transactions.  Several cases involved sales to elderly, unsophisticated clients who were unaware of the risks and commissions being charged on the transactions.  FINRA found that the firm failed to take reasonable steps to communicate with their clients, and instead relied exclusively on conversations with the rep to determine whether the transactions were appropriate for the clients.

Registration and disciplinary history

In order to lawfully sell investments to the public, a firm must either be registered or exempt from registration.  The GMS Group is an Deleware corporation formed in 1997 and registered with FINRA, the SEC and in 52 states and territories.

According to FINRA’s CRD disclosure report, The GMS Group has been the subject of eleven customer complaints and five 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 fraudulent 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.

If you suspect that you have been the victim of investment fraud, or had a financial advisor recommend unsuitable investments to you, call us today for a free, confidential consultation at (702) 380-3131.