Royal Alliance Associates: Regulatory Overview

The White Law Group reviews the regulatory history of Royal Alliance Associates.  

Royal Alliance Associates, an advisory firm based in Jersey City, NJ, is the first of eight Advisory Group firms to rebrand to “Osaic Wealth” this year.  Royal Alliance has had numerous regulatory actions, that can be found under the CRD/FINRA Broker Check report of Osaic Wealth Inc. (#CRD 23131). FINRA is the regulator who oversees brokers and brokerage firms.   

Regulatory actions taken against a broker-dealer may include censures, fines, suspensions and restitution, among others. They can have serious consequences for a broker-dealer’s profile and reputation. The following is a review of FINRA and the SEC’s regulatory actions involving Royal Alliance Associates., now known as Osaic Wealth. The firm reportedly has 84 disclosure events on its broker report, including 46 regulatory events, 31 arbitrations and 7 bonds.  

SEC Fines Royal Alliance Associates for Unsuitable Investments

November 2020 – The Securities and Exchange Commission (SEC) fined Royal Alliance Associates $500,000 after allegations of widespread losses for advisory clients in connection with unsuitable investments in volatility-linked exchange-traded products (ETPs).  

According to a cease-and-desist order, Royal Alliance allegedly failed to supervise unsuitable investments in volatility-linked exchange traded products. Between January 2016 and April 2020 certain Royal Alliance reps on behalf of advisory accounts allegedly bought and held for extended periods a security called iPath S&P 500 VIX Short–Term Futures ETN (“VXX”). VXX attempts to track the implied volatility of the S&P 500 Index with short-term futures contracts. According to the VXX prospectus, the constant buying and selling of these contracts by the issuer creates roll costs in most instances.   

January 2020 – Royal Alliance Associates, was censured and fined $400,000 for allegedly failing to catch two former brokers who separately stole more than $3.8 million from the accounts of four customers and are now imprisoned. Royal Alliance to pay $400,000 for Failure to Supervise

On January 16, 2020, FINRA alleged that between 2009 and 2017, a New Jersey broker purportedly wire-transferred $1.4 million in more than 60 transactions from a New Hampshire widow who was reportedly disabled, to the bank account of his limited liability company and to a law firm. Royal Alliance purportedly failed to stop the transfers, despite the company’s address being the same as the broker’s office, firm prohibitions against third-party wire transfers, and other red flags.  

FINRA also reportedly alleged that a Massachusetts broker stole more than $2.3 million from two customers between June 2013 and June 2017 by purportedly forging 65 third-party wire transfer requests from their accounts to the bank account that the broker allegedly controlled.  FINRA claimed that when one cashiering group employee questioned a discrepancy in signatures, the broker allegedly claimed that the customer signed her name differently each time, without further investigation. The ex-broker also allegedly falsified papers when questions were raised about the account receiving the checks, which had the broker’s home address.  

Massachusetts Regulators charge Royal Alliance with Failure to Supervise  

January 2019 – Massachusetts’ securities division charged Royal Alliance Associates with failure to supervise broker Stephen F. Davis of Barrington, R.I. who recommended unsuitable investments to a couple, costing the investors nearly $60,000.  The Massachusetts securities regulators allege Davis breached his fiduciary duty when he advised two investors in 2015 to exchange an annuity three years before its expiration for another annuity with a much lower interest rate.  The allegations also claim that Davis failed to file paperwork for the exchange in a timely manner leading to $15,000 in penalties for the couple, while the broker received more than $17,000 in commissions. The couple reportedly also lost more than $43,000 in interest.  

FINRA Award: $1.4 million for Unsuitable Non-Traded REITs  

July 2015 – Royal Alliance was ordered to pay $1.4 million to three separate retired investors due allegations of negligence while supervising sales of non-traded real estate investment, trusts, and variable annuities.  The retirees, who were all reportedly former employees of AT&T Inc., were allegedly advised by Kathleen Tarr, a former broker, that they should take a lump-sum buyout from their employer and invest it into Inland Real Estate, a non traded REIT, and unspecific variable annuities.  A FINRA arbitration panel reportedly granted the award at more than $1 million in compensatory damages along with $25,000, per investor, in punitive damages and $241,000 in costs and legal fees.  

Broker Misconduct and Customer Complaints  

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  There have been several cases of registered representatives employed by Royal Alliance Associates who were allegedly involved in broker misconduct and fraudulent activities. When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.  

FINRA Bars Royal Alliance Broker after allegations of Misappropriated Funds   

July 2021 – According to public records on FINRA’s website, the regulator reportedly barred financial advisor John Swon IV from the securities industry in connection with its investigation concerning allegations in a customer complaint that he misappropriated funds.   According to the complaint, the client alleges that Swon “misappropriated or otherwise mismanaged funds entrusted to him” as an investment advisory representative of Focus Financial Network, Inc.  According to Swon’s FINRA broker report, he was registered with Royal Alliance in Bloomington, MN from October 2012 until April 2021”  

November 2018 – Former Royal Alliance advisor Kimberly Kitts reportedly pleaded guilty to charges filed by the U.S. Attorney for the District of Massachusetts, of wire fraud, investment adviser fraud, and aggravated identity theft. She was reportedly sentenced to 87 months in prison and ordered to pay $3,085,939 in restitution.  

Kitts allegedly stole $3,000,000 from her clients by purportedly forging their signatures on withdrawal requests from variable annuities, forging signatures to wire funds from client brokerage accounts, and misleading clients into withdrawing funds to make fake tax payments. During the course of six years, Kitts purportedly made 82 withdrawals from seven clients’ accounts and allegedly used the money to buy several luxury automobiles and vacations for herself, according to SEC charges.  

August 2018 – Royal Alliance broker Gary Basralian, of Springfield, NJ, was reportedly sentenced to 60 months in prison after pleading guilty in U.S. District Court to one count of wire fraud and one count of investment adviser fraud. Allegations included stealing at least $2 million from clients to finance his personal expenses including payments on a BMW and thousands of dollars in credit card bills.  

From July 2007 through November 2017, Basralian allegedly defrauded his clients by falsely telling them he would invest their money in securities and other investments. Instead, he purportedly used those funds for his own personal expenditures. Basralian was registered with Royal Alliance Associates in Maplewood, NJ from January 1989 until December 2017.  

November 2017 – Former Royal Alliance broker, Angelo Talebi has 35 customer complaints filed against him during his career in the securities industry. Allegations include unsuitable recommendations among others. Talebi was reportedly suspended in December 2015 from the securities industry and fined $10,000 for allegedly executing transactions in a customer’s online account, according to his broker report. 

Potential Lawsuits to Recover Investment Losses  

If you have concerns regarding investments with Royal Alliance Associates now known as Osaic Wealth, please call The White Law Group at 888-637-5510.  

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.                  

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.  With over 30 years of securities law experience, The White Law Group can help you recover your investment losses.                   

With offices in Seattle, Washington and Chicago, Illinois, the firm reviews securities fraud cases throughout the country. For more information on The White Law Group, please visit http://whitesecuritieslaw.com.