Latest NEXT Financial Group News
Jul 20, 2021
REGISTER NOW A Houston, Texas-based midsize independent broker-dealer will pay $750,000 to settle a FINRA case for alleged systemic supervisory failures relating to excessive trading and variable annuities, according to the signed agreement. The firm, NEXT Financial Group, was also censured and required to retain an independent consultant. Atria Wealth Solutions, which acquired NEXT in June 2019, said NEXT has already enhanced its controls and remains focused on effective compliance practices that protect its advisors and their clients, according to a statement. By settling, NEXT agrees to FINRA’s conditions without admitting or denying the findings. From January 2012 through February 2019, NEXT allegedly failed to establish, maintain and enforce a supervisory system, including written supervisory procedures, reasonably designed to detect and prevent unsuitable short-term trading of mutual funds and municipal bonds in customer accounts and over-concentration of customer accounts in Puerto Rican municipal bonds. In addition, from March 2013 through February 2017, the firm allegedly failed to create a reasonable system of controls to test and verify that its supervisory procedures could achieve compliance. As a result of the alleged misconduct, NEXT violated securities laws and regulations, and FINRA rules. Overall, NEXT’s supervisory structure was not particularly good, says Benjamin Edwards, associate law professor at the William S. Boyd School of Law, citing the firm’s supervisors’ lack of diligence about following up, even in instances where there were significant red flags. “One of the challenging things for supervisors at a lot of independent brokerage firms is that oftentimes these guys are off in their own offices, doing their own things, and they're not closely supervised with someone in their physical office. “The compliance person is in a real pressure spot — you don't tend to get large bonuses for rigorously protecting the investing public by preventing profitable transactions for the brokerage firm. So it's a hard spot to be in,” he says.