American Portfolios: Customer Complaints, Regulatory Actions

American Portfolios Financial Services Review

The White Law Group reviews the regulatory history of American Portfolios Financial Services.

American Portfolios Financial Services, (CRD#: 18487, Holbrook, NY), headquartered in Holbrook, NY, is a national financial advisory firm. According to its FINRA Broker Report, the firm reportedly has 7 disclosure events on its broker record including 6 regulatory events, and 1 arbitration.

A broker-dealer’s Central Registration Depository (CRD) record is a database maintained by the Financial Industry Regulatory Authority (FINRA) and is used to store and track information about individuals and firms involved in the securities industry.  

Regulatory actions found on a broker-dealer’s CRD may include censures, fines, suspensions, and restitution, among others. They can have grave consequences for the firm’s profile and reputation.  

The following is a review of regulatory actions involving American Portfolios Financial Services. The review includes regulatory sanctions from the Financial Industry Regulatory Authority (FINRA), the US Securities Exchange Commission (SEC) and state regulators. 

Failure to Supervise

December 2021 – FINRA censured and fined American Portfolios $225,000 for supervisory failures. From September 2011 to June 2018, American Portfolios’ supervisory system and written supervisory procedures (WSPs) were inadequately designed to ensure compliance with monitoring customer fund transfers to third parties. Additionally, the firm failed to enforce its existing WSPs regarding such fund transfers.

Consequently, a sales assistant linked with American Portfolios misappropriated around $390,000 of customer funds. This resulted in alleged violations of NASD Rules 3010 and 30122, along with FINRA Rules 3110 and 2010.

SEC Charges involving sales of Volatility-linked Exchange-traded products

November 2020- The Securities and Exchange Commission settled charges against American Portfolios Financial Services/American Portfolios Advisors Inc. regarding the sale of volatility-linked exchange-traded products from January 2016 to April 2020. These products aimed to track short-term volatility expectations but were prone to decline over longer periods, as stated in offering documents.

Despite this, representatives of the firm reportedly recommended customers hold these products for extended periods without fully understanding them. Additionally, the firm lacked policies on suitability and failed to supervise brokers recommending these products. As part of the settlement, American Portfolios agreed to cease violations, received a censure, and agreed to pay disgorgement, prejudgment interest, and a civil penalty of $650,000.

Mutual Fund Switching

December 2015 – American Portfolios was censured and fined $50,000 for its supervisory failures and the misconduct of its employees. FINRA found that the broker-dealer, through two of its registered representatives, violated NASD Conduct Rule 2310, IM-2310-2, and FINRA Rules 2111 and 2010 by engaging in unsuitable mutual fund switching.

Additionally, FINRA determined that American Portfolios failed to establish and enforce a supervisory system, including written supervisory procedures, reasonably designed to detect and prevent unsuitable mutual fund switching.

Broker Misconduct and Customer Complaints

There have been several cases of registered representatives employed by American Portfolios Financial Services who were allegedly involved in broker misconduct and fraudulent activities. 

December 2020 – According to a Letter of Acceptance, Waiver and Consent (AWC) on December 3, FINRA barred former American Portfolios advisor Bob Halldin after he refused to appear for on-the-record testimony requested by FINRA as a part of an investigation in connection with a series of Form U5 amendments filed by his former member firm. FINRA stated that the Form U5s disclosed complaints and arbitrations filed against Halldin alleging that he traded securities in individuals’ brokerage accounts held away from the firm.

According to his FINRA BrokerCheck report, Halldin was registered with American Portfolios Financial Services Advisors in Newington, CT from 2012 until 2017. His broker report indicates that he has 3 customer complaints for allegations of unsuitable investments, overconcentration and unauthorized trading, among others. He also reportedly has 2 judgment/liens and 6 financial disclosures including a bankruptcy from August 2020, according to FINRA. 

Broker Misappropriation from Clients

July 2020 Former American Portfolios broker Mark Hopkins from Grand Blanc, Michigan, was charged by the Securities and Exchange Commission (SEC) for allegedly stealing over $1 million from clients. In 2017, Hopkins raised $1.15 million from at least five clients for what he claimed was an investment program promising 6% to 7% profit.

Instead of investing the funds as promised, Hopkins deposited them into his personal account and used the money for himself. To conceal his actions, he falsified account statements. The SEC seeks injunctive relief, disgorgement of gains, prejudgment interest, and civil penalties.

Hopkins, who was registered with American Portfolios Financial Services until 2018, was barred by FINRA in May 2019 following allegations of misconduct, including accepting customer funds without approval and failure to report outside business activities and judgments.

Recovery of Investment Losses 

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.

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. 

 Free Consultation with a Securities Attorney

The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois.

If you have concerns regarding investments you purchased through American Portfolios Financial Services and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.