The White Law Group reviews the regulatory history of Equitable Advisors (AXAAdvisors).
Equitable Advisors (formerly AXA advisors)(CRD#: 6627/SEC#: 801-14065,8-17883), is a a dual registered broker dealer headquartered in New York, New York. The firm reportedly had $1.2 billion in revenue in 2022, with 3,710 representatives and $27 billion in assets under management.
Prior to June 2020, Equitable Advisors, LLC operated under the name AXA Advisors, LLC. Aside from this name change, the firm remains the same as it was before, according to Smart Asset.
The following is a brief breakdown of publicly available information regarding Equitable Advisors (AXA Advisors) and its securities sales practices and FINRA regulatory history. FINRA is the self-regulator that oversees brokers and brokerage firms.
According to its FINRA BrokerCheck report, Equitable Advisors has a large number of disclosures including 26 regulatory actions and 11 arbitrations.
To access Equitable Advisors’ full CRD, you can visit FINRA BrokerCheck. Regulatory actions can include censures, fines, suspensions, or even the revocation of a broker’s license. These actions indicate instances where the broker or firm has engaged in misconduct or failed to meet regulatory requirements.
Arbitration is a dispute resolution process commonly used in the securities industry. BrokerCheck may 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.
Equitable Advisors (AXA Advisors) Broker Misconduct and Customer Complaints
There have been several cases of registered representatives employed by Equitable Advisors 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.
FINRA barred Equitable Advisors financial advisor Edgar Kleydman
FINRA was purportedly investigating whether Kleydman engaged in private securities transactions without providing written notice to his former member firm AXA Advisors (now known as Equitable Advisors, LLC).
Kleydman reportedly refused to appear for on-the-record testimony, leading to the bar. This matter purportedly originates from an AXA customer’s complaint to FINRA alleging that Kleydman had engaged in private securities transactions without providing written notice to AXA. Kleydman reportedly has three complaints on his broker record.
When a FINRA registered representative conducts business outside the scope of the brokerage firm where they are registered, the act can be considered “selling away.” Some brokers, looking to supplement their income, will go outside the traditional market, trying to find other products to push.
If a registered broker “sells away” from their firm, the brokerage firm may still be liable for negligent supervision of their broker representative and may be responsible for investment losses in a FINRA dispute resolution claim.
Equitable Advisor James Simpson Pleads Guilty to Investment Fraud
Toledo investment advisor, James Simpson, reportedly pleaded guilty to federal investment fraud charges on October 21, 2021, according to reports.
Simpson, 80, reportedly admitted to defrauding clients out of more than $400,000 in an alleged investment fraud scheme, according to court documents.
At least eight of the clients wrote Simpson checks for a “special investment opportunity”, but instead of investing the money he allegedly used the money for his own benefit, according to prosecutors. He is accused of using investor funds to pay other investors under the guise that he was properly handling his clients’ money.
According to the Ohio Times citing Simpson’s FINRA Broker report, Simpson was reportedly allowed to resign in August “during an investigation into a customer complaint about alleged misappropriation of customer funds and doubts about the suitability of an indexed annuity sold outside the company.” His broker report further indicates that Simpson was registered with Equitable Advisors LLC for over forty years.
FINRA Rule 3110 Supervision
The Financial Industry Regulatory Authority (FINRA) has several rules in place to regulate broker-dealers, including the FINRA Rule 3110 Supervision rule. This rule requires broker-dealer firms to establish and maintain a system to supervise the activities of their associated persons (e.g., brokers) to ensure that they comply with securities laws and regulations.
Broker dealers are required to designate an appropriately qualified supervisor who is responsible for the supervision system.
The rule further requires firms to develop written supervisory procedures (WSPs) that are reasonably designed to achieve compliance with applicable securities laws and regulations, as well as FINRA rules. Then they must implement the WSPs effectively and ensure that they are followed by all associated persons.
FINRA Rule 3110 also requires that broker-dealers establish a process for identifying and responding to red flags that may indicate potential violations or misconduct by associated persons. This includes conducting periodic reviews of customer accounts and transactions, as well as monitoring communications (e.g., email, social media) to detect potential violations.
New York Department of Financial Services fined AXA $20 million
In March 2014, AXA Equitable reportedly changed the investment strategies of previously sold variable annuities products without giving adequate notice to regulators.
This resulted in limiting potential returns for customers without providing adequate notice to regulators. Although it is not unusual for annuity companies to alter the investment options offered by their products, the regulator clearly believed that whatever notice was provided was not adequate. Given that variable annuities are often purchased by retirees that depend on these products as a source of income, any change that may alter the potential returns of the investment is significant.
FINRA Sanctions AXA for Using Court Instead of Arbitration
in 2015, FINRA Censured and fined Equitable (AXA Advisors) $150,000 after the regulator found the firm failed to arbitrate 102 disputes between the firm and some of its registered representatives, as required under FINRA’s Code of Arbitration Procedure.
FINRA’s rule requires that disputes between member firms and associated persons be arbitrated, instead Equitable filed actions in state courts to recover prepaid securities commissions from former firm registered representatives who had received those commissions from the firm’s affiliated subsidiary, acting as paymaster.
According to FINRA, the court filings were inappropriate because the very nature of the transactions classified them as disputes between the firm and the registered representatives relating to the business activities of both. While the firm’s affiliated subsidiary served as paymaster, the firm alone determined the number of securities commissions to be paid to its registered representatives.
The firm agreed to the sanctions.
Equitable Advisors (AXA Advisors) Misrepresentations involving Junk Bonds
The broker-dealer unit of AXA Equitable Life Insurance Co. agreed to pay a $600,000 fine and repay $172,000 to 401(k) retirement plan participants for marketing some junk bond funds as investment-grade, according to FINRA.
Equitable Advisors (AXA Advisors LLC) reportedly misrepresented the credit quality of certain funds offered within group annuity contracts for the corporate retirement plans, for five years ending in November 2015. The firm also agreed to send affected plan participants corrective disclosures.
FINRA further alleged that the mischaracterization of junk bond funds occurred in thousands of enrollment forms, investment option attachments and other documents created by the broker-dealer’s life insurance company affiliate. Approximately 800 retirement plans and 6,200 plan participants were affected, according to FINRA.
Equitable Advisors (AXA Advisors) reportedly violated three rules regarding supervisory procedures, advertising and negligent misrepresentation.
FINRA Arbitration Attorney
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 arbitration is generally a faster and less expensive alternative to traditional litigation.
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 attorney who is knowledgeable about securities law can greatly increase your chances of success.
The FINRA attorneys at the White Law Group can help you with the many aspects of the arbitration process including evaluating the merits of your claim and determining whether you have a strong case for arbitration.
The White Law Group can assist you in drafting a statement of claim and will represent you at the arbitration hearing, present evidence and make arguments on your behalf. They may be able to negotiate a settlement for you before going to arbitration.
If you have any questions about investments you made with Equitable Advisors (AXA Advisors) or if you believe that you have been the victim of securities fraud, The White Law Group may be able to help. To contact the firm, please call 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, including experience working at FINRA and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions attempt to recover their investment losses.
Although our offices are 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 https://whitesecuritieslaw.com.
Tags: AXA Advisors, broker-dealer review, Equitable Advisors, failure to supervise, finra sanctions, James Simpson Last modified: May 16, 2023