FINRA Censures and Fines Newbridge Securities for Lax Due Diligence

The Financial Industry Regulatory Authority has censured and fined Newbridge Securities Corporation $50,000 for failing to “reasonable supervise representative’s recommendations of an alternative mutual fund.”

According to the allegations, the firm allowed the sale of a publicly offered, alternative mutual fund on its platform without conducting reasonable due diligence and a sufficient understanding of its risks and features.

The firm’s representatives sold $323,000 in shares of the alternative mutual fund to customers and during an “extreme volatile event,” the fund lost nearly 80% of its value.

FINRA ordered Newbridge to pay $114,025.24, plus interest, in restitution to its customers.

Newbridge did not admit to or deny the findings.

FINRA has fined Newbridge multiple times in the past for similar reasons. Most recently, in September 2019, they were fined $225,000 for failing to properly supervise the sale of complex securities such as structured notes and leveraged, inverse, and inverse-leveraged exchange-traded funds.

In November and December 2017, four investor complaints were filed against Newbridge, alleging losses totaling $760,000 for “unsuitable securities” sales.

The Pennsylvania Department of Banking and Securities also fined Newbridge $499,000 for failing to supervise one Pennsylvania broker that sold structured products to his clients in the state.

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