FINRA Fines Oppenheimer $2.5 million

The Financial Industry Regulatory  Authority (FINRA) recently imposed a hefty fine on the broker dealer, Oppenheimer & Co. Inc, for failure to adequately supervise their employee Mark Hotton. The firm was fine $2.5 million and ordered to pay $1.25 million in restitution.

According to FINRA, Oppenheimer failed to supervise Hotton in a number of respects. The firm allegedly failed to thoroughly investigate Hotton prior to hiring him. Hotton’s record apparently showed that he had a history of customer disputes including criminal charges. Furthermore, it is alleged that Oppenheimer failed to place Hotton under adequate supervision even after they learned that his business partners had sued him for defrauding them out of millions.

FINRA also purportedly found that Oppenheimer overlooked “red flags” including money transfers from customer accounts to entities controlled by Hotton. More than $2.9 million was allegedly transferred out of customer accounts. In addition,  the firm apparently failed to adequately supervise Hotton despite the fact that Oppenheimer’s surveillance analyst detected excessive trading on customers accounts.

According to an ABC report, “Hotton was sentenced to prison in October as a result of two scams. In 2011, he promised a Connecticut real estate company that he would secure a $20 million loan in return for a $200,000 upfront fee and other payments. Then, in 2012, he pledged to raise $4.5 million to back a Broadway production of “Rebecca,” a musical based on a psychological thriller by Daphne du Maurier and an Alfred Hitchcock film, and was paid tens of thousands by the producers.”

Brokerage firms have a fiduciary duty to monitor all the business activities and transactions of their employees. When a broker violates securities laws and industry regulations the brokerage firm may be liable for negligent supervision and can be held responsible for investment losses in a FINRA dispute resolution claim.

If you suffered losses investing with Mark Hotton and would like to discuss your potential to recover your losses through a FINRA arbitration claim, please call the securities attorney of The White Law Group at (312) 238-9650 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to the representation of investors in FINRA arbitration claims against brokerage firms throughout the United States. Our offices are located in Chicago, Illinois and Vero Beach, Florida.