As set out in this FINRA link, FINRA recently fined AXA Advisors, LLC for its failures to act in relation to the sale by its registered representative of a ponzi scheme. The Letter of Acceptance, Waiver, and Consent documents failures to supervise by AXA including failures to follow up on red flags regarding the ponzi scheme. One red flag was a suspicious excel spreadsheet found in an audit of the broker’s office. The broker also had a checkered regulatory history which made him a “compliance risk.”
Greco & Greco regularly represents investors in “selling away” cases such as these where the broker engages in ponzi schemes or outright steals funds from customers. Customers may attempt to recover their losses in FINRA arbitration by demonstrating firms’ failures to supervise, failure to follow up on red flags, and by arguing the firm is responsible for the acts of its agent under the legal theories of respondeat superior and vicarious liability. Federal and state securities laws also mandate liability of control persons (such as brokerage firms) if certain requirements are met. If you are the victim of a ponzi scheme or broker theft by a FINRA registered broker, please contact one of our attorneys for a free consultation.