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Oppenheimer & Co. Inc.

Background Information

Oppenheimer & Co. Inc. (OPCO) is a wholly owned subsidiary of Oppenheimer Holdings Inc., a publicly owned financial services holdings company. The firm is a registered broker-dealer and investment advisory firm headquartered in New York City. The firm has offices in New York City, Long Island, NY, Boca Raton, Florida and in several other large cities. According to Oppenheimer’s FINRA Brokercheck report dated July, 2014, Oppenheimer has been the subject of over 65 regulatory events and 175 FINRA arbitrations.

Regulatory Violations

Oppenheimer & Co. Inc. has been the subject of many regulatory investigations, some which resulted in disciplinary actions by regulators.

Selling Penny Stocks

The New Hampshire Bureau of Securities Regulation fined OPCO $155,000 in 2010 for selling penny stocks and for failing to supervise its brokers. An examination found that both broker agents, including a branch manager, and their clients had purchased the same penny stocks. OPCO’s procedures prohibit financial advisors from soliciting or recommending any transactions in penny stocks. The examination also found that a least two clients who purchased the penny stocks had conservative investment objections on file. Penny stocks are considered speculative investments and therefore may not be appropriate for conservative investors.

National Settlement Offer Regarding Auction Rate Securities Investments

In 2010, OPCO reached settlements with both the New York Attorney General and the Massachusetts Securities Division that will restore partial liquidity to Oppenheimer investors nationwide holding illiquid auction rate securities. Auction rate securities (ARS) were marketed and sold to investors as cash equivalent, safe investments. However, when the market for ARS froze, many investors were left with illiquid investments. According to the Wall Street Journal, Oppenheimer said it is purchasing the securities on a periodic basis in accordance with its settlements. They are committed to purchase a total of $57.3 million in the securities through 2016 and will pay about $2.5 million as a result of legal settlements with clients.

Failure to Supervise Results in Fraudulent Scheme

In 2009, the SEC censured and fined OPCO $850,000 for failure to supervise in a salesperson’s scheme to increase order flow to OPCO. The salesperson provided a trader at another broker-dealer with secret gratuities and entertainment in exchange for directing a substantial flow of orders to OPCO for execution at prices that were favorable to OPCO and detrimental to the other broker-dealer. The salesperson was also compensated based solely on a percentage of the revenue generated by his customers’ orders. The trading and most of the communications were conducted by e-mail between the two traders. Several e-mail exchanges presented red flags indicating the scheme; however, because of a deficiency in OPCO’s e-mail review procedures, none of the e-mails was reviewed by OPCO staff, as required by OPCO’s electronic communications policy. If OPCO had monitored the salesperson’s e-mail communications, the supervisors likely would have seen these messages and could have prevented the misconduct or detected it at an earlier time.

FINRA Fines and Sanctions – OPCO

Oppenheimer & Co, Inc. (CRD #249, New York, New York) submitted an offer of settlement for selling certain penny stocks that were not registered nor had an applicable exemption. OPCO was censured and fined $1.4 million and ordered to have an independent consultant review the adequacy of the firms policies, systems and procedures related to receipt or purchase and subsequent journal or sale of penny stocks; the supervision of foreign financial institutions, including the firms “know your customer” obligations; and the firms anti-money laundering procedures. Failures in the firm’s supervisory system and Anti-Money Laundering program led to these widespread sales of unregistered securities. OPCO sold a total of over one billion unregistered shares of twenty penny stocks. No exemptions applied to any of these sales and each sale constituted a violation. All of these sales raised red flags that were not investigated. OPCO did not conduct a reasonable inquiry into the penny stocks transactions at issue. ( FINRA Case #2009018668801 )

Oppenheimer & Co, Inc. (CRD #249, New York, New York) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $675,000 and ordered to pay $246,974 plus interest, in restitution for charging unfair and unreasonable prices in municipal securities transactions and lacking an adequate supervisory system. One trader was responsible for the majority of the transactions. This trader purchased municipal securities from a broker-dealer on behalf of OPCO, held the bonds in inventory for at least overnight, and then made the bonds available for resale at an excessive markup to OPCO’s customers. The trader was responsible for determining the prices paid by customers and the markups ranged from 5.01% to 15.57%. The markups were never disclosed to OPCO’s customers. The firms failed to detect the excessive markups charged because its supervisory system was deficient. ( FINRA Case #2009018102501 )

Silver Law Group

Silver Law Group is a nationally recognized securities and investment fraud law firm with Martindale-Hubbell® Peer Review Ratings™ “AV” rated lawyers that handle all securities arbitration matters on a contingency fee basis. The Law Firm, at no cost to investors will review account activity and account statements to determine whether there was any misconduct, whether there are damages and the legal causes of action. We investigate all sales practice violations, while taking into consideration the investor’s age, investment background, and the relationship between the investor and the brokerage firm and its financial advisor. According to securities industry rules and regulations, unsuitable investment advice, securities concentration, fraudulent misrepresentations and omissions of material facts, breach of fiduciary duty, conflicts of interest, variable annuity switching are among the causes of action that may be available to investors in claims for damages against brokerage firms and their financial advisors in a securities arbitration claim filed with the Financial Industry Regulatory Authority (FINRA). We represent investors in FINRA arbitration claims on a contingency fee basis.

To learn more call us at (954) 755-4799 or Toll Free at (800) 975-4345

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