The White Law Group reviews the regulatory history of SagePoint Financial.
SagePoint Financial Inc., (CRD#: 133763/SEC#: 801-64721,8-66771 ) based in Phoenix, Arizona, is a dual registered broker dealer and advisory firm. According to Smart Asset, the company has $17 billion in assets under management. SagePoint Financial will reportedly rebrand under the name “Osaic” with seven other independent broker-dealers in the fall.
According to its CRD, or FINRA BrokerCheck report, SagePoint Financial has 31 disclosure events including 11 arbitrations and 20 regulatory actions. Broker-dealers may face various regulatory actions from FINRA and the Securities and Exchange Commission, including censures, fines, suspensions, and restitution. Such regulatory actions can have severe consequences, impacting the reputation and profile of the broker-dealer.
This broker dealer review focuses on publicly available information concerning SagePoint Financial, its securities sales practices, and its regulatory history with FINRA, which serves as the self-regulatory body overseeing brokers and brokerage firms. To review SagePoint Financial full CRD, you can visit FINRA BrokerCheck.
SagePoint Financial – Broker Misconduct and Customer Complaints
There have been several cases of registered representatives employed by SagePoint Financial 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 reportedly barred a former SagePoint broker based in Thomaston, CT this week after he failed to provide information in an investigation. FINRA’s investigation was in connection with an AWC from 2021 in which the regulator found that SagePoint had failed in its supervisory duties.
Between 2013 and 2021, SagePoint allegedly failed to establish and maintain a supervisory system to supervise associated persons with histories of industry and regulatory misconduct. FINRA said that SagePoint’s disciplinary recordkeeping was “haphazard and fragmented,” and as a result, the firm failed to escalate discipline and impose heightened supervision when representatives’ misconduct presented high risks and failed to reasonably follow up on red flags of misconduct. Consequently, the firm violated NASD Rule 3010 and FINRA Rules 3110 and 2010.
Since the beginning of 2013, SagePoint Financial issued more than 1,500 disciplinary letters to more than 700 associated persons, with 132 of those persons receiving three or more disciplinary letters. The firm disciplined 11 associated persons at least 110 times in total and cited them, without discipline, for numerous other violations. The firm’s “systemic supervisory failures” resulted in the firm failing to impose heightened supervision on any 5 of those 11 associated persons during that time despite their disciplinary histories. On the limited occasions when the firm fined those 11 associated persons, the fines were not tailored to the associated persons’ histories of misconduct, according to FINRA. SagePoint also did not consider reporting the conduct of those associated persons under FINRA Rule 4530(b)
FINRA censured and fined the firm $700,000. They were also required to institute new supervisory procedures.
FINRA Suspends Sagepoint Financial Broker for UIT trading
FINRA reportedly suspended a SagePoint broker in Corona, California and issued a $10,000 fine in July 2021.
The broker allegedly engaged in an unsuitable pattern of short-term trading of Unit Investment Trusts (UITs) in customer accounts, and purportedly made recommendations that caused his customers to incur unnecessary sales charges and were unsuitable in view of the frequency and cost of the transactions.
FINRA Bars David Melilli, Sagepoint Broker
FINRA barred former Sagepoint Financial advisor David Melilli of Moorestown, New Jersey after he reportedly failed to provide information in its investigation. FINRA was investigating the following allegations against Melilli: unauthorized trading in the account of a deceased customer; unsuitable and excessive trading in customer accounts; and using discretion without written authorization in customer accounts, among others. FINRA Alleges Advisor David Melilli made Excessive, Unsuitable Trades
SagePoint Financial Regulatory Actions
Regulatory actions taken against a broker-dealer may include censures, fines, suspensions and restitution, among others. They can have serious consequences for a broker-dealer’s profile and reputation. SagePoint reportedly has 20 regulatory actions disclosed on their broker report, including the following for your review:
SagePoint Overcharged 529 plan Investors
FINRA sanctioned SagePoint Financial and two other firms on January 25, 2023, for failure to establish and maintain a supervisory system reasonably designed to ensure that all eligible customers received applicable sales charge waivers or special share classes in connection with rolling over 529 plans from one state plan to another. SagePoint agreed to a censure; restitution of $156,903.93 plus interest and certification of SagePoint’s remediation and implementation. FINRA Sanctions 3 Firms for 529 Overcharges
FINRA Sanctions SagePoint for GPB Capital Offerings
SagePoint Financial allegedly failed to communicate to investors that in an offering that GPB Capital Holdings, LLC failed to timely file financial statements.
As we reported, the CEO of GPB Capital Holdings, and two others were arrested in 2021 in connection with a massive “Ponzi-like scheme” that allegedly defrauded 17,000 investors across the U.S. out of more than $1.7 billion.
According to FINRA, on April 27, 2018, GPB Capital sent a letter to many broker-dealers that sold GPB Capital-offerings stating that financial statements would be delayed pending the completion of a forensic audit.
After representatives at SagePoint Financial received the letter from GPB Capital, the firm sold limited partnership interests in GPB Automotive Portfolio to clients. SagePoint Financial made 56 sales with a total principal amount of $4,951,546, earning $343,308 in commissions. SagePoint Financial agreed to a censure, a $60,000 fine; and partial restitution of $325,475.66 plus interest.
FINRA Sanctions Sagepoint for Failure to Supervise Margin Trading
FINRA censured and fined Sagepoint Financial $35,000 for supervisory failures on September 9, 2022. From April 2014 through July 2017, Sagepoint allegedly failed to establish, maintain, and enforce a supervisory system for margin trading. Sagepoint purportedly failed to see red flags of unsuitable use of margin in two customer accounts that caused the customers to pay more than $51,800 in commissions, fees, and margin interest. The firm also paid $51,830.24 in restitution, plus interest. FINRA Fines Sagepoint Financial, Inc. For Suitability Issues
SagePoint Financial Censured & Fined for VA Sales
Between January 2013 and December 2014, SagePoint allegedly failed to establish, maintain and enforce a supervisory system and written procedures designed to reasonably supervise representatives’ sale of multi-share class variable annuities and failed to provide training to their representatives and principals on the sale and supervision of multi-share class variable annuities. SagePoint was censured and fined $200,000, according to FINRA.
In addition to regulatory actions, FINRA BrokerCheck may disclose arbitration awards related to customer disputes. These awards typically reveal the outcomes of arbitration proceedings, potentially resulting in financial compensation for affected customers. If a broker or firm has multiple arbitration awards against them, it may indicate a pattern of unresolved customer complaints or misconduct. According to its broker record, SagePoint has 11 arbitrations.
The White Law Group Files a FINRA Claim against SagePoint Financial
The White Law Group filed a FINRA claim against Sagepoint Financial in February 2020 on behalf of a Hayden Lake, Idaho resident, requesting damages for alleged violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision. Sagepoint allegedly unsuitably invested its client in high-risk oil and gas private placement investments sponsored by Atlas. The claim was seeking damages between $100,000.00 and $250,000.00. FINRA Lawsuit filed against Sagepoint Financial, Inc.
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 SagePoint Financial 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, The White Law Group can help you recover your investment losses.
With offices 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, finra sanctions, Osaic, SagePoint Financial Last modified: July 20, 2023