WFG Investments Inc., a midsized independent broker-dealer based in Dallas, is facing a $650,000 “global fine” by the Financial Industry Regulatory Authority Inc., according to a filing with the Securities and Exchange Commission.
It would be the firm's second six-figure Finra fine in the past two years. WFG agreed in March 2013 to pay a $200,000 fine to Finra over alleged lapses that led it to miss a stock-fraud scheme.
The firm did not reveal the reasons for the latest fine in its annual report of audited financials to the SEC, known as a firm's Focus report. While most broker-dealers file audited financials in February and March, WFG filed its Focus report in August because its fiscal year ends in June.
Broker-dealers can incur “global fines” from securities regulators when attempting to settle a variety of long running or chronic problems.
“The company expects to incur a global fine from Finra in the near future and has accrued that expense in the amount of $650,000 as of June 30, 2014,” according to the filing. “The amount is an estimate provided by legal counsel working closely with Finra.”
WFG has about 270 registered reps and financial advisers. It had total revenues of $46.6 million for the 12 months ending in June, and posted a loss of $210,000. The company has close to $1.6 million in net capital on hand, according to the SEC filing.
David Williams, president of WFG Investments, said it wasn't appropriate for him to comment on the Finra fine at this time.
He added that WFG has made “wholesale changes” over the past 18 months, including hiring a new chief compliance officer, Robert Schlangen, and doubling its compliance staff to nine people.
“We felt we weren't going in the direction that was going to be successful in the long term,” said Mr. Williams, whose father, Wilson, owns the firm and is its chief executive.
WFG revealed the potential Finra fine weeks after a former registered rep affiliated with the firm,
Matthew A. Bell, along with the ex-husband of a star from HBO's The Sopranos and five other individuals, were arrested in July on securities fraud charges in connection with market manipulation of penny stocks. David Williams did not comment about Mr. Bell, who was affiliated with WFG from July 2009 to June 2013. It is not known if those charges are related to its most recent Finra fine.
