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Bank-Based Brokerage Firm Fined $100,000 for Selling Senior Citizens Unsuitable Securities


Investment Professionals, Inc. had been previously investigated for using high-pressure tactics on elderly clients in Massachusetts

A San Antonio-based investment firm operating in Massachusetts was recently fined $100,000 for selling seniors unsuitable investments. The firm, Investment Professionals, Inc., (IPI) which operates out of community banks throughout the state, had been the subject of an investigation by the Massachusetts Securities Division.

Financial advisors and the firms that supervise them have a duty to know their clients and their investment goals, and only recommend investments that are suitable for their financial situation. Unsuitable investment advice violates securities industry regulations, and recommending unsuitable, risky investments to elderly clients may be considered a form of elder financial exploitation. Unfortunately, this was not the first official state investigation of IPI’s marketing and sales methods.

In 2016, IPI reimbursed a group of senior citizen clients as a result of the firm’s aggressive sales tactics

A similar investigation last year by the Massachusetts Securities Division found pervasive problems with IPI’s employee culture and business model. Specifically, the Division’s complaint stated that “the pervasive sales culture emphasizing and rewarding the volume of production at the expense of compliance with policies and procedures, suitability, and oversight means that certain senior citizen bank customers have been harmed.”

In examining the business sales structure of the firm, investigators determined that IPI depended heavily on referrals to generate more sales. The investigation also found that in the last two-and-a-half years prior to the investigation, the top ten performing IPI employees stationed in Massachusetts community banks generated more than 2,200 referrals for the firm. Nearly half of those referred were senior citizens, whom by nature may be more vulnerable to high-pressure sales tactics.

In addition, the Massachusetts Securities Division reported that IPI “failed to supervise its representatives by allowing and promoting prohibited sales contests.”

Other banks, including Morgan Stanley, have also been fined or censured for high-pressure sales contests in Massachusetts

Unfortunately, IPI is not alone when it comes to allegations of high-pressure sales contests that could harm customers, especially those who have been pressured to purchase unsuitable or risky investments. On April 7th, Morgan Stanley settled with the state of Massachusetts for $1 million over a case that involved a high-pressure sales contest to convince clients to borrow money against their brokerage accounts. In the last year and a half, Morgan Stanley branches in Massachusetts and Rhode Island ran multiple contests reported to involve at least thirty advisers.

Officials from the Massachusetts Securities Division (MSD) reported that the company violated its fiduciary duty to its clients, encouraged cross-selling, and broke internal company rules against sales contests. Other recent enforcement actions by the MSD include the investigation of a broker for selling variable annuities, as well as firms with a history of hiring bad brokers.

If you’ve lost money due to being sold unsuitable investments, or believe you have been exploited as the result of a financial sales contest, contact an experienced attorney today

The attorneys at Silver Law Group are leaders in the field of securities arbitration and elder financial fraud. We represent individual and institutional investors in Massachusetts and across the United States who have lost money at the hands of a trusted financial advisor. Scott Silver is currently the chairman of the American Trial Lawyers Association, Securities and Financial Fraud Group and routinely advocates for investors in securities arbitration claims.

Our services are provided on a contingency-fee basis, which means we are only compensated if there is a recovery of losses. Contact us for a complimentary consultation about your situation.

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