The White Law Group reviews the regulatory history of RBC Capital Markets.
RBC Capital Markets (CRD#: 31194/SEC#: 801-13059,8-45411), a dual registered broker dealer and registered investment advisory firm, is headquartered in New York, NY. The firm employs approximately 6,000 registered representatives across 322 branches.
The firm reportedly has 485 disclosure events on its broker report or CRD. FINRA, the self-regulator that oversees brokers and brokerage firms and the SEC (Securities and Exchange Commission) may impose sanctions such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation.
Arbitration awards are also reported on a firm’s CRD, often related to customer disputes. These awards typically indicate the outcome of arbitration proceedings, which could result in financial compensation for unhappy 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 review of publicly available information regarding RBC Capital Markets and its securities sales practices and FINRA regulatory history.
To view RBC Capital’s full CRD, you can visit FINRA BrokerCheck.
Mutual Fund Overcharges
July 1, 2024: RBC Capital Markets has reportedly been fined $75,000 by FINRA for failing to provide mutual fund sales charge waivers and fee rebates, costing clients nearly $265,000 across 1,450 accounts. From January 2016 to December 2023, RBC’s oversight system did not effectively apply rights of reinstatement benefits, which allow investors to repurchase mutual fund shares without incurring extra charges if done within a specific timeframe. The firm’s automated alerts were inadequately set to detect eligible transactions, leading to numerous missed benefits for clients. FINRA noted that RBC’s alleged deficiencies violated its supervisory rules, emphasizing the importance of robust oversight systems.
RBC Capital Fined for Inaccurate Trade Confirmations
May 1, 2024: FINRA fined RBC Capital Markets nearly $800,000 for inaccurate trade confirmations and violations of Regulation T. Between 2010 and 2019, RBC allegedly sent approximately 940,000 trade confirmations with inaccurate information to customers and failed to send millions more confirmations.
This violated Rule 10b-10 of the Securities Exchange Act of 1934 and FINRA Rule 2232(a), which require accurate written confirmations for securities transactions. RBC also violated Regulation T by extending credit to certain customers and introducing firms from 2012 to 2016.
As part of the settlement, RBC was censured, fined $375,000, and ordered to pay $393,834 in restitution to affected customers. Additionally, RBC agreed to correct the errors and not to repeat the violations.
RBC Capital Markets Sanctioned for Unsuitable Short-term trading
April 2023 FINRA sanctioned RBC Capital for unsuitable short-term trading practices. Between January 2017 and December 2018, RBC failed to establish adequate supervisory systems to monitor whether its registered representatives were recommending short-term trading of syndicate preferred stocks, resulting in losses for retail customers.
Despite having procedures in place, RBC’s electronic surveillance of short-term trading was inadequate. Representatives allegedly advised customers to buy syndicate preferred stocks and sell them within 180 days, leading to losses. As a result, RBC violated FINRA Rules 3110 and 2010. They have been censured, fined $300,000, and ordered to pay restitution and disgorgement totaling over $780,000.
SEC Charges RBC Capital with Unfair Dealing
September 2021 RBC Capital Markets agreed to pay over $800,000 to settle charges brought by the Securities and Exchange Commission (SEC) for unfair dealing in municipal bond offerings. The SEC also charged two former RBC executives in connection with the violations.
Over a four-year period, RBC allegedly improperly allocated bonds intended for institutional customers and dealers to “flippers,” who then resold them for profit. Additionally, RBC violated instructions from issuers by allocating bonds to flippers ahead of retail customer orders.
RBC also allegedly obtained bonds for its own inventory by placing orders with flippers, bypassing lower priority. RBC consented to a public administrative and cease-and-desist order, agreeing to pay a $150,000 penalty, disgorgement of $552,440, plus interest, and a censure. The SEC had previously brought similar charges in multiple instances between 2018 and 2021.
RBC Capital: Review of Broker Misconduct and Customer Complaints
There have been many cases of registered representatives employed by RBC Capital 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.
April 2024 FINRA barred financial advisor Scott Matalon from the securities industry after he reportedly refused to cooperate with their investigation into allegations made by a client. The client claimed that Matalon allowed a deceased client to make unauthorized withdrawals and surrender an insurance policy despite health issues. The client further alleged collusion with an accountant to convert funds, excessive fees, unsuitable investment recommendations, and failure to communicate account activity. The settlement for the first complaint was $50,000, while the second complaint, filed in November 2023, settled for $500,000 after alleging unsuitable investments with damages requested at $1.5 million.
August 2022 Between May 2016 and March 2019, a former RBC representative in Naples, Florida reportedly conducted 432 transactions in the accounts of nine customers without obtaining prior written authorization. This action violated NASD Rule 2510(b), which prohibits registered representatives from exercising discretion in customer accounts without written authorization accepted by the member firm. He also violated FINRA Rule 2010, which mandates high standards of commercial honor and equitable principles of trade.
Investor Disputes Filed against RBC
September 2017 An all-public FINRA arbitration panel awarded $212,000 to the estate of a former RBC Wealth Management client, Hazel Kitzman, who alleged negligence and elder abuse by the firm. Kitzman’s attorneys claimed unauthorized sale of shares and transfer of funds from another account, seeking compensatory damages of $1.5 million and punitive damages, but the panel denied these requests. RBC’s counterclaim for legal costs was also denied, with the firm denying the allegations throughout the case.
RBC Capital – More Regulatory Failures
FINRA and the SEC may impose regulatory actions against financial advisors and broker-dealers such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation. RBC Capital currently has 244 regulatory events indicated by its CRD (broker report). The following is a brief review of a few of RBC Capital’s regulatory failures.
December 2020, RBC was censured and ordered to pay $685,520, plus interest, in restitution. RBC failed to establish and maintain a supervisory system reasonably designed to supervise representatives’ recommendations to customers to purchase particular share classes of 529 savings plans in violation of MSRB Rule G-27.
April 2020, according to an Offer of Settlement with the Securities and Exchange Commission, RBC Capital Markets was censured and ordered to pay disgorgement of $2,607,676, plus interest, and a civil penalty of $650,000. RBC consented to findings that it disadvantaged certain brokerage customers by failing to ascertain they were eligible for a less expensive share class and recommending and selling them more expensive share classes in mutual funds when less expensive share classes were available, and that it did not disclose that the more expensive share classes would result in greater compensation for RBC while negatively impacting the overall return on the customers’ investments. RBC thus violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933.
Failure to Supervise
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.
How to Recover Investment Losses
If you have suffered losses investing with RBC Capital Markets or if you believe that you have been the victim of securities fraud, The White Law Group may be able to help you by filing a FINRA claim. 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.
With offices in Seattle, Washington and Chicago, Illinois, the firm reviews securities fraud cases throughout the country.
