FINRA Fines H. Beck, Inc. for Insufficient Supervision

Just this past month, H. Beck, Inc. of Bethesda, Maryland submitted a Letter of Acceptance Waiver and Consent (“AWC”) to settle alleged FINRA Rule violations concerning the failures in the firm’s supervisory system and written supervisory procedures.  H. Beck is said to have more than 800 registered representatives based out of over 460 registered branch offices.

Specifically, it was alleged in the AWC that the firm failed to maintain a supervisory system reasonably designed to ensure that customers received certain sales charge discounts.  H.Beck was also alleged to have insufficient supervisory procedures governing the use of consolidated reports with customers, leading to inaccurate information being sent to customers.

According to the AWC, H. Beck failed to “identify and apply sales charge discounts to customers with eligible purchases of UITs.”  A UIT, or uniform investment trust, is a type of investment company that offers undivided interests in a portfolio of securities.  These interests are frequently called “units.”

The sponsors of UITs typically offer investors a number of ways to reduce sales charges.  As a result of H. Beck’s alleged failure to properly apply sales charge discounts, their customers are said to have paid excessive sales charges of nearly $200,000.

H. Beck was also accused of having improperly supervised the use of consolidated reports with customers. As a result, FINRA alleged that H. Beck registered representatives sent consolidated reports to their customers about their assets held both at the firm and away from it, with information that were incorrect.

Based upon the foregoing, FINRA alleged that H. Beck violated NASD Rules 3010, 2110, 2210, and FINRA Rule 2010.

Malecki Law has handled a number of cases against H. Beck, Inc.  If you or a family member lost money as a result of the conduct of a broker at H. Beck, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.