Corporate & Securities Law

SEC Faults Next Financial Group For Violating Privacy Laws In Helping Financial Advisers Transition To Firm

By James Eccleston

Next Financial Group has been ordered by an SEC administrative-law judge to pay a $125,000 penalty as well as cease and desist from any recruiting tactics that violate privacy laws -- known in the industry as Reg S-P.

In his decision, Judge James Kelly scolded Next Financial of Houston for some of its past recruiting tactics that involved private information of clients.

For example, Next Financial asked recruits to provide their user identification and password so the firm could access the computer systems of the recruits' brokerage firm and take non-public personal information of clients.

The judge wrote, "Both of Next's expert witnesses conceded that using recruits' user identifications and passwords in this fashion was not consistent with industry practice and that they did not know of any brokerage firms, other than Next, that had done so."

SNSFE guides financial advisers who wish to transition from firm to firm and not violate the law.

Source:  InvestmentNews

Full post as published by FinancialCounsel on June 26, 2008 (boomark / email).