Herbert J. Sims & Co., Inc. Regulatory Review and Investor Concerns
Herbert J. Sims & Co., Inc. (CRD # 3420) is a long-standing FINRA-registered broker-dealer headquartered in Fairfield, Connecticut. Founded in 1946, the firm provides wealth management and investment banking services and operates multiple branch offices nationwide. Like many regional brokerage firms, Herbert J. Sims & Co. has historically been active in the sale of private placements and other complex investment products, which carry heightened risks for retail investors.
Public records show that the firm has been the subject of multiple regulatory actions, including sanctions by both FINRA and the U.S. Securities and Exchange Commission (SEC), raising questions about supervision, compliance systems, and investor protection.
Firm Overview
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Firm Name: Herbert J. Sims & Co., Inc.
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CRD Number: 3420
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SEC Number: 8-3315
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FINRA Membership: Since 1946
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Headquarters: Fairfield, Connecticut
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Disclosures: 10 total
According to regulatory filings, the firm has approximately 100 registered representatives and more than a dozen branch offices across the United States.
FINRA Sanction – AML Compliance Failures (January 2023)
In January 2023, FINRA sanctioned Herbert J. Sims & Co. for anti-money laundering (AML) failures spanning several years.
Key Findings:
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Between 2016 and 2019, the firm failed to establish and implement an AML program reasonably designed to detect and report suspicious cyber-related events.
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These failures violated FINRA Rule 3310(a) (AML compliance) and FINRA Rule 2010 (standards of commercial honor).
AML systems are a core component of broker-dealer supervision, particularly for firms handling complex transactions, alternative investments, and private placements. FINRA emphasized that firms must maintain systems capable of identifying red flags and escalating suspicious activity appropriately.
SEC Enforcement Action – Unsuitable Structured Product Recommendations (August 2021)
In August 2021, the SEC censured and fined Herbert J. Sims & Co. $250,000, issuing a cease-and-desist order related to unsuitable investment recommendations.
According to the SEC:
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From January 2015 through April 2018, 13 registered representatives at the firm’s Boca Raton, Florida branch recommended highly complex, high-risk variable interest rate structured products.
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These products were sold to 45 customers for whom the investments were allegedly unsuitable given their financial circumstances, investment objectives, and risk tolerance.
The SEC’s findings highlight recurring regulatory concerns involving complex structured products, which often expose retail investors to significant downside risk, limited liquidity, and opaque pricing.
Private Placements and Due Diligence Concerns
Herbert J. Sims & Co. has been active in the sale of private placements and other alternative investments, including products that are typically illiquid and difficult to value.
Broker-dealers that recommend private placements have enhanced obligations, including:
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Conducting reasonable due diligence on the issuer and offering
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Ensuring that risks are fully and fairly disclosed
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Determining that the investment is suitable for each customer
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Implementing supervisory systems designed to prevent improper sales practices
Regulatory actions involving unsuitable recommendations and supervisory failures often raise questions about whether adequate due diligence and oversight were in place at the firm and branch level.
Why Supervision Matters
FINRA rules require broker-dealers to maintain supervisory systems reasonably designed to achieve compliance with securities laws and regulations. When firms fail to supervise:
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Complex or high-risk products may be sold to conservative or income-focused investors
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Red flags involving suitability, concentration, or customer complaints may go unaddressed
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Investors may suffer significant and avoidable losses
Both the FINRA and SEC actions involving Herbert J. Sims & Co. underscore the importance of effective supervision, particularly when recommending structured products or private placements.
Investor Options: FINRA Arbitration
Investors who believe they were harmed by unsuitable recommendations, inadequate disclosures, or supervisory failures may have the right to pursue recovery through FINRA arbitration.
FINRA arbitration allows investors to:
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Bring claims directly against brokerage firms and advisors
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Seek recovery of investment losses, interest, and related damages
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Resolve disputes more efficiently than traditional court litigation
The White Law Group represents investors nationwide in FINRA arbitration claims involving private placements, structured products, and other high-risk investments.
How The White Law Group Can Help
The White Law Group focuses exclusively on representing investors in securities fraud and misconduct cases. Our firm investigates claims involving:
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Unsuitable investment recommendations
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Private placement losses
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Structured product sales
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Failure to supervise
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Regulatory violations by broker-dealers
If you invested through Herbert J. Sims & Co., Inc. and experienced significant losses, our attorneys can evaluate your potential FINRA arbitration claim at no cost. Please call our offices at 888-637-5510 for a free consultation.
Frequently Asked Questions
What types of investments has Herbert J. Sims & Co. been accused of improperly selling?
Regulators have cited unsuitable recommendations involving high-risk, complex structured products, and the firm has also been active in the sale of private placements and alternative investments.
What was the SEC penalty against Herbert J. Sims & Co.?
In August 2021, the SEC fined the firm $250,000, issued a cease-and-desist order, and censured the firm for allegedly making unsuitable recommendations of complex structured products to retail investors.
Can investors recover losses through FINRA arbitration?
Yes. Investors may be able to seek compensation through FINRA arbitration if they can show that unsuitable recommendations, inadequate disclosures, or supervisory failures contributed to their losses.
