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FINRA Fines First Midwest Securities for Supervisory Deficiencies

FINRA fined First Midwest Securities, Inc. $75,000.00 for unsuitable recommendations, excessive trading and supervisory failures that caused customer losses of approximately $287,380.00.  According to FINRA, between January 2006 and December 2009, First Midwest failed to establish, maintain and enforce a supervisory system and written procedures to reasonably identify excessive trading of equities.   Due to the supervisory deficiencies, First Midwest failed to prevent excessive trading by one of its registered representatives.

FINRA’s investigation found that at various times from September 2006 through August 2008, one of First Midwest’s registered representatives recommended and engaged in excessive, unsuitable trading in the accounts of four customers.  The unsuitable practices included excessive, short-term trading, and excessive use of margin that resulted in $149,000 in commissions for the registered representative.

Without admitting or denying the allegations, First Midwest agreed to pay $75,000 to settle FINRA’s charges.  It is unclear from FINRA’s Letter of Acceptance, Waiver and Consent whether FINRA arbitration proceedings were initiated on behalf of the four customers whose accounts were churned, or whether the four customers were compensated.