The Financial Industry Regulatory Authority Inc. has ordered New Jersey-based broker-dealer Buckman Buckman & Reid to pay approximately $205,000 in restitution to seven customers for failing to supervise two former registered representatives who recommended excessive and unsuitable trades.
Finra previously barred the two brokers, whose names they did not disclose in a release.
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In addition, Finra sanctioned Harry John (Chip) Buckman, Jr., one of the firm's owners, for failing to supervise the two registered representatives, both of whom reported to him. Finra suspended Mr. Buckman for three months, assessed a $20,000 fine, and required him to complete 40 hours of continuing education concerning supervisory responsibilities.
Finra found that Mr. Buckman and the firm failed to identify that one of the barred registered representatives had engaged in frequent and short-term trading of unit investment trusts (UITs) and other long-term investments with significant up-front costs. From 2013 to 2014, the broker's excessive trading of UITs and other long-term products caused his customers to pay approximately $210,000 in commissions and resulted in losses of approximately $163,000.
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Finra said that the firm and Mr. Buckman also failed to identify that the second barred registered representative had more than 130 trades in the account of an 89-year-old retired customer during a one-year period. Although this customer's account regularly appeared on the firm's monthly reports of potentially problematic activity, no one reviewed those reports or conducted reasonable suitability reviews.
