NEW YORK (Reuters) – An NASD panel awarded $1 million of damages to a Prudential Securities Inc. client because the firm did not properly discipline a broker despite customer complaints, the client’s law firm said.
Under the arbitration ruling made last Friday by the market regulator, Prudential Securities. which is jointly owned by Prudential Financial Inc. (NYSE:PRU – News) and Wachovia Corp. (NYSE:WB – News), will pay $500,000 in punitive damages and $500,000 in compensatory damages,, according to a statement by the client’s law firm on Monday.
A spokesman for Prudential declined to comment.
The client’s lawyers said that Prudential did not crack down on a broker in its Encino, California, branch office who pursued an aggressive investment strategy even though the client preferred less risk.
Even though Sylvia Schuyler, a 75-year-old from Santa Barbara, California, was a conservative investor, the broker sold her bonds in more aggressive investments, leading to losses in her retirement accounts, the attorneys said.
The successor to NASD is the Financial Industry Regulatory Authority (FINRA). FINRA is a self-regulatory organization overseeing U.S. broker-dealers. It aims to protect investors by ensuring the securities industry operates fairly and honestly. FINRA writes and enforces rules governing broker-dealers, examines firms for compliance, and fosters market transparency. Additionally, it educates investors and provides dispute resolution services. By maintaining a robust regulatory framework, FINRA helps maintain market integrity and investor confidence. Broker-dealers and their registered representatives must adhere to FINRA’s standards, ensuring ethical conduct and financial responsibility in the securities industry.