Written by The White Law Group• July 9, 2024• 1:23 am• Blog, FINRA SEC Sanctions, Securities Fraud Articles

Joseph Gunnar & Company Regulatory History Overview

Joseph Gunnar & company, featured by top securities fraud attorneys, the White Law Group.

The White Law Group reviews the regulatory history of FINRA registered broker-dealer, Joseph Gunnar & Company LLC.

Joseph Gunnar & Company (CRD# 24795) is a national financial advisory firm headquartered in Uniondale, New York. The firm reportedly manages $28.7 million and provides investment advisory services. Joseph Gunnar & Company reportedly has 16 disclosure events on its broker record including 4 regulatory events, and 12 arbitrations, according to its broker CRD.

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FINRA, the self-regulator that oversees brokers and brokerage firms, and the SEC may impose regulatory actions against a broker-dealer such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation. FINRA BrokerCheck may also report arbitration awards related to customer disputes. These awards typically indicate the outcome of arbitration proceedings, which could result in financial compensation for aggrieved customers. The presence of multiple arbitration awards against a broker or firm can indicate a history of unresolved customer complaints or poor conduct.

The following is a brief review of publicly available information regarding Joseph Gunnar & Company and its securities sales practices and FINRA regulatory history.

To view Joseph Gunnar’s full CRD, you can visit FINRA BrokerCheck.

Joseph Gunnar & Company Regulatory History

According to its CRD, Joseph Gunnar has 5 regulatory actions on its record.

July 8, 2024: Joseph Gunnar and Company is facing FINRA’s regulatory action for practices between 2018 and 2023. The firm reportedly charged a minimum commission of $100 on equity transactions from August 2018 to September 2022, resulting in unfair charges on 1,683 transactions. Additionally, the firm reportedly failed to establish and maintain an adequate supervisory system to ensure compliance with FINRA rules. From June 2020 to August 2023, Joseph Gunnar also allegedly neglected to file offering documents for 14 private placements. Consequently, FINRA sanctioned the firm with a censure, a $65,000 fine, and restitution of $69,898.17 plus interest.

On December 4, 2020, Joseph Gunnar and Company agreed to a censure and fine of $55,000. From May 10, 2017, to June 1, 2018, the firm allegedly did not have a proper system in place to identify and report potentially suspicious transactions involving low-priced securities. This means they didn’t have effective measures to detect and report any suspicious activity related to these types of transactions. This failure to establish an anti-money laundering program violated the rules set by FINRA, specifically Rules 3310(a) and 2010.

Additionally, during that same time, the firm also reportedly didn’t have a due diligence program that included appropriate policies, procedures, and controls to continuously identify and report any known or suspected money laundering activity involving correspondent accounts for foreign financial institutions (FFIs). Consequently, they violated FINRA Rules 3310(b) and 2010.

Unsuitable Investments

On December 5, 2017, Joseph Gunner and Company agreed to sanctions of a censure and $60,000 fine and to review its supervisory processes and procedures.

From approximately January 2010 to January 2015 (referred to as the “Relevant Period”), Joseph Gunnar and Company allegedly failed to create and maintain a proper oversight system, which includes written procedures, to prevent inappropriate trading in specific customer accounts managed by one of the firm’s top-performing registered representatives. This violation goes against NASD Rules 3010(a) and 3010(b), as well as FINRA Rules 3110(a), 3110(b), and 2010.

During the Relevant Period, the firm’s managing director allegedly made unsuitable investment recommendations for investment in the account of a widow in her 70s, unemployed, and relying on a fixed income, with a liquid net worth of around $300,000. Throughout the Relevant Period, the representative repeatedly advised the customer to invest in high-risk, speculative securities that didn’t align with her investment profile. Moreover, the recommendations often resulted in an excessive concentration of her accounts, which represented almost all of her liquid assets, in speculative securities. Additionally, the advisor reportedly frequently engaged in short-term trading of these speculative investments, resulting in losses exceeding $150,000.

FINRA Arbitration Panel Awards Former Joseph Gunnar Broker $1.5 Million

December 2022: A Financial Industry Regulatory Authority (FINRA) arbitration panel ruled that a New York broker-dealer must pay $1.5 million to a former broker who claimed the company owed him commissions.

The former broker, who had been registered since 1995 and had worked with multiple firms before joining Joseph Gunnar & Co. in 2011, filed an arbitration claim with FINRA in January 2020. The claim alleged breach of contract, unjust enrichment, and fraud against the Gunnar firm. Initially seeking nearly $1.4 million in unpaid commissions, the claim amount later escalated to around $7.6 million.

The arbitration panel dismissed the claims against certain individuals associated with the company. However, they ordered the firm to pay the former broker a total of over $1.5 million, along with 5% annual interest, for specific items mentioned in the award document. Additionally, the panel ruled that the company must pay the former broker 75% of other damages within thirty days of liquidity events occurring in three different companies.

Broker Misconduct and Customer Complaints – Joseph Gunnar & Company

There have been several cases of registered representatives employed by Joseph Gunnar & Company who were allegedly involved in broker misconduct and fraudulent activities. Broker dealers are required to supervise their employees. If they fail to do so they may be held liable through a FINRA arbitration claim.

In August 2019, a Joseph Gunnar representative located in New York, NY agreed to sanctions of suspension and a $5,000 fine.

The broker allegedly engaged in unauthorized trading by placing six trades in the accounts of two customers who were deceased at the time of the trades. By this conduct, he violated FINRA Rule 2010. Additionally, the representative exercised discretion without written authorization in the accounts of five customers, in violation of NASD Rule 2510 and FINRA Rule 2010.

In 2016, a former broker of Joseph Gunnar and Company, from Greenwich, Connecticut, got hit with a fine of $20,000 and a two-month suspension from any involvement with FINRA member firms. It was claimed that the broker recommended risky and unsuitable short-term steepener transactions to his clients.

These steepeners are complex products linked to the difference between long-term and short-term interest rates. The representative allegedly suggested that some of his customers hold these steepeners for as little as two months, as part of a quick trading strategy. However, because the secondary market for steepeners is not very liquid, customers often ended up buying them at high prices and selling them later at a loss. This unsuitable short-term trading strategy caused customers to lose a total of around $24,000.

FINRA Rules – Supervision

Failure to supervise is a significant concern in the securities industry, and it falls under FINRA’s supervision rule (FINRA Rule 3110). This rule focuses on the regulatory oversight and monitoring conducted by the Financial Industry Regulatory Authority (FINRA) to safeguard investors.

Supervision encompasses the diligent monitoring and review of registered representatives’ activities, including their interactions with clients.

The objective of FINRA’s supervision rule is to ensure investor protection and guarantee that member firms and registered representatives comply with regulatory requirements, acting in the best interests of their clients.

In cases where brokers breach securities laws, for instance, by making unsuitable investments, the brokerage firm they are affiliated with can be held accountable for investment losses through FINRA Arbitration.

Potential Claims to Recover Investment Losses

If your broker has defrauded you, you may be able to file a FINRA claim against your brokerage firm. FINRA arbitration can be a complex and technical process, and having an experienced securities attorney who is knowledgeable about securities law can greatly increase your chances of success.

If you have concerns about investments you made through Joseph Gunnar & Company LLC and would like to consult with a securities attorney, please reach out to The White Law Group at 888-637-5510.

The White Law Group, LLC is a reputable national law firm specializing in securities fraud, securities arbitration, investor protection, and securities regulation/compliance. We are dedicated to assisting investors across all 50 states in pursuing claims against their financial professionals or brokerage firms. Since its establishment in 2010, the firm has successfully handled over 700 FINRA arbitration cases.

The firm represents investors in various types of securities-related claims, including those involving stock fraud, misrepresentation by brokers, churning, unsuitable investments, selling away, unauthorized trading, and more.