American Portfolios: Customer Complaints, Regulatory Actions

American Portfolios Financial Services Review

The White Law Group reviews the regulatory history of American Portfolios Financial Services. In 2022, Advisor Group, now known as Osaic Wealth, acquired American Portfolios Financial Services.

American Portfolios Financial Services, (CRD#: 18487, Holbrook, NY), previously headquartered in Holbrook, NY, is a national financial advisory firm. According to its FINRA Broker Report, the firm reportedly has 8 disclosure events on its broker record including 7 regulatory events, and 1 arbitration.

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 and complaints 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. 

Advisor Group Acquires American Portfolios and 7 other Firms

November 2022: Advisor Group, prior to rebranding as Osaic Wealth,  acquired American Portfolios Financial Services,  a N.Y.–based independent broker/dealer with nearly $40 billion in client assets and 850 advisors in 2022.

American Portfolios Censured and Fined $225,000

August 15th, 2024: Between January 2019 and August 2022, American Portfolios allegedly violated FINRA Rules 3310(a), 3310(f), and 2010 by failing to develop and implement an anti-money laundering (AML) compliance program reasonably designed to detect and cause the reporting of suspicious activity in low-priced securities.

In addition, during the same period, American Portfolios violated FINRA Rules 3110  by failing to establish, maintain, and enforce a supervisory system, including written procedures. The firm was censured and fined $225,000.

Failure to Supervise Customer Funds Transfers

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.

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.

Unsuitable 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 FINRA rules 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 3rd, 2020: 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 customer 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, over-concentration 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. 

American Portfolios Broker Theft Charges and Complaints

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. Hopkins reportedly has numerous complaints on his record

Class Action Lawsuit vs. Individual FINRA Arbitration Lawsuit

You may wonder whether a large class action lawsuit is a better litigation option for you than an individual FINRA arbitration case.  The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option.  Class action lawsuits as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.

Filing a FINRA Lawsuit

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 and Seattle, Washington.

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.