Investor Lawyers Blog
Infinex Investments (“Infinex”, CRD No. 35371) of Meriden, Connecticut has entered into a Consent Order with Massachusetts securities regulators, agreeing to pay a fine of $125,000 and make restition to investors to resolve allegations that it failed to adequately supervise agents who were selling high-commission securities products. Infinex registered representatives allegedly targeted customers at bank branches, primarily senior citizens, for unsuitable investment recommendations, including real estate investment trusts REITs and variable annuities, primarily to senior customers at local banks who didn’t understand the products.
Infinex is majority-owned by a group of nearly 40 banks that offer securities on bank premises and has selling agreements with approximately 30 banks in Massachusetts. Infinex also operates in other states and, according to the Financial Industry Regulatory Authority (“FINRA”), is licensed to operate in 53 U.S. states and territories. Therefore, it is possible that sales of investments such as those that allegedly occurred in Massachusetts may have occurred in bank branches in other states.
The Massachusetts Securities Division reportedly began investigating sales practices by Infinex after senior citizens complained that they had been sold investments they did not ask for or did not understand. The Consent Order is accessible below.
Executed-Infinex-Consent-Order-E-2017-0092
Brokerage firms like Infinex and their representatives must have a reasonable basis for any investment recommendations that they make to customers- a requirement known as “suitability”. FINRA’s suitability rule, Rule 2111, requires that before making a recommendation, broker-dealers must take into account a customer’s age, risk tolerance, time horizon, liquidity needs, other investments and experience, as well as any applicable tax considerations.
FINRA has provided the following guidance with respect to the terms “risk tolerance,” “time horizon” and “liquidity needs”:
- Risk Tolerance: “A customer’s ability and willingness to lose some or all of [the] original investment in exchange for greater potential returns.”
- Time Horizon: “The expected number of months, years, or decades [a customer plans to invest] to achieve a particular financial goal.”
- Liquidity Needs: “The extent to which a customer desires the ability or has financial obligations that dictate the need to quickly and easily convert to cash all or a portion of an investment or investments without experiencing significant loss in value from, for example, the lack of a ready market, or incurring significant cost or penalties.”
Attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes concerning unsuitable investment recommendations by stockbrokers or investment advisors. Investors may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.