The White Law Group reviews the regulatory history of MML Investors Services LLC.
MML Investors Services Inc. (CRD#: 10409/SEC#: 801-44264,8-27250), a dual registered broker-dealer and investment advisory firm, is headquartered in Springfield, Mass. The firm reportedly had $1.57 billion in revenue in 2022 and 6,978 advisors. The firm reportedly manages $58.8 billion.
The firm reportedly has 25 disclosure events on its broker record including 22 regulatory events and 1 arbitration among others.
FINRA and the Securities and Exchange Commission 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. 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 breakdown of publicly available information regarding MML Investors Services and its securities sales practices and FINRA regulatory history. FINRA is the self-regulator that oversees brokers and brokerage firms.
MML Investors Services Regulatory History
May 16, 2023: Just this week FINRA has reportedly censured and fined MML Investors Services $250, 000 for reporting and supervisory failures. From December 2018 through February 2021, MML failed to timely amend its associated persons’ Uniform Applications for Securities Industry Registration or Transfer (Forms U4) and Securities Industry Registration (Forms U5) to report 39 customer complaints and dispositions, criminal charges, regulatory actions, and other disclosable events and failed to establish and maintain a supervisory system reasonably designed to ensure the timely reporting of disclosable events during that time. This is not the first time the firm has been sanctioned for reporting failures.
November 2011: FINRA issued an AWC against MML in which the firm was censured and fined $300,000 for failing to timely file Forms U5 and amendments to Forms U4 and for failing to establish and maintain a supervisory system and establish, maintain, and enforce written supervisory procedures reasonably designed to ensure the timely filing of Form U4 and Form US amendments.
May 2016: FINRA declared a “mutual fund waiver sweep,” for which the regulator requested documents and information from broker-dealers related to waivers, or reimbursements, available to some investors for mutual fund sales charges.
After a self-review in September 2015, the firm reported to FINRA that its eligible customers had not received available sales charge waivers. According to FINRA, MML Investors Services allegedly overcharged 792 customers on sales of mutual funds and was ordered to pay close to $1.8 million in restitution.
As part of this settlement, MML Investors agrees to pay restitution to eligible customers, which is estimated to total $1,864,167.77.
July 2013: Massachusetts Securities Division conducted a sweep that included MML Investors Services and 14 other brokerage firms, looking at sales practices involving alternative investments sold to seniors.
Alternative investments include oil and gas partnerships, private placements, structured products, hedge funds and tenant-in-common offerings.
August 2013: FINRA censured and fined MML Investors Services $125,000 and ordered it to pay $760,000 in restitiution. The Firm allegedly violated NASD Rules 3010(a) and 2110 by failing to reasonably supervise its representatives in connection with their unapproved sale of certain private securities. Thc Firm’s written supervisory procedures (“WSPs”) stated that its reps were prohibited from participating in private securities transactions without the prior written approval of the Chief Compliance Officer or his or her delegate. Despite the rules and numerous red flags, the firm’s reps were engaged in selling away. As a result of the Firm’s supervisory failures, two reps sold unapproved ICI promissory notes to seven investors who sustained losses of up to $760,000.The issuer of these unapproved promissory notes was ICI, which was later determined to be engaged in a multimillion dollar Ponzi scheme.
December 2021: FINRA censured and ordered MML Investors Services to pay 617,726.28 in restitution for overcharges in 529 Savings Plans.
From January 2013 to March 2017, MML failed to reasonably supervise registered representatives’ recommendations to customers to purchase share classes of 529 savings plans. MML did not provide adequate guidance to representatives regarding the share-class suitability factors specific to 529 plan investments when recommending the plans and did not provide supervisors with the information necessary to properly evaluate the suitability of 529 share-class recommendations. As a result of the foregoing, MML violated MSRB Rules G-27(a), (b) and (c).
Further, from July 2016 through October 2019, MML failed to establish and maintain a supervisory system reasonably designed to identify customers’ contributions to mutual funds and 529 plans and determine whether those transactions qualified customers to take advantage of available breakpoint discounts.
March 2020: FINRA censured and fined MML Investors $75,000 after it failed to prevent certain registered and associated persons who had been terminated from the Firm from continuing to access customer records and information, including nonpublic personal information, in violation of the SEC’s Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Personal Information and FINRA Rule 2010.
October 2021: Mass. Securities regulators also fined MML Investor Services $4.75 million for its alleged failure to properly supervise its agents over their social media use, including one former broker who promoted GameStop stock on his own time. The firm paid an additional $750,000 for not registering 478 broker-dealer agents.
MML Investors Services Broker Misconduct and Customer Complaints
There have been several cases of registered representatives employed by MML Investors Services 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.
August 2022: Massachusetts Securities Division fined MML Investors Services $250,000 for its alleged failure to supervise a former registered representative Charles Evan. The Mass. broker was also registered as an investment advisor with Capital Planning Group of Massachusetts, Inc.
Evan allegedly pressured investors to buy high-commission insurance products that were unsuitable for them. Mass. securities regulators reportedly barred him from working as a financial advisor in Massachusetts. FINRA also barred Evan in 2020 after he refused to provide information in the investigation.
May 2022 Ex-MML Investors Services broker Adam Belardino was charged with wire fraud for his alleged embezzlement of more than $313,000 from a 64-year-old client.
Belardino allegedly persuaded his client to liquidate some of her portfolio and transfer the liquidated funds to his new firm the Maddox Group, for investment.
The client reportedly transferred more than $313,000 to Maddox yet Belardino purportedly failed to invest the money as he had promised, but used it to pay the operating expenses of Maddox, including payroll and office rent; pay down prior debt; pay personal credit card charges, etc., according to the DOJ statement.
FINRA barred Belardino the previous year after he failed to provide information in its investigation into allegations of excessive levels of trading, among others.
Belardino reportedly faces up to 20 years in prison.
November 2018: MML Investors Services Broker Oscar Francis was purportedly sentenced to 41 months in prison followed by three years of supervised release and was ordered to pay restitution in the amount of $422,387.18.
Francis reportedly admitted that between June 25, 2012 and May 31, 2017, he allegedly devised a scheme to defraud at least eleven investors out of approximately $665,190. He purportedly solicited his MML clients, with whom he attended church, to invest in Mahum, Inc., which Francis incorporated and controlled. According to the complaints, Francis falsely represented that Mahum was affiliated with MML and that investments in Mahum would generate high rates of return.
The broker allegedly spent the funds on cocaine, alcohol, strip clubs, and luxury items, according to the complaint. When investors inquired or complained about the status of their investments, Francis would obtain loans and use other investment funds to repay the investors to prevent them from reporting Francis’s activity to MML or to law enforcement.
Failure to Supervise
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.
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.
Potential Lawsuits to Recover Investment Losses
If you have any questions about investments you made with MML Investors Services 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: broker-dealer review, Charles Evan, failure to supervise, FINRA claims, finra sanctions, Massachusetts Sec. Division, MML Investors Services, SEC charges, supervision Last modified: May 17, 2023