Newbridge Securities Corporation Stock Broker Misconduct

Newbridge Securities Corporation Stock Broker Misconduct

Screen Shot 2015-07-26 at 9.45.55 PMNewbridge is an almost twenty year old Florida company that has aggressively marketed itself and suffered from many security regulation issues.  Newbridge has a serious record of actions against it by Finra and other regulators.  Newbridge has been fined over $1,000,000 by regulators for violations of Finra and Securities and Exchange commission rules.  It has had brokers fined and even banned from the securities industry for various violations, including false and forged account forms, making trades without the customer’s approval, making unsuitable recommendations and over-trading (churning) a customer’s account for commissions.  Newbridge falsely represented the nature of “handling fees” that were for no handling, and took undisclosed commissions.  We have specific experience litigating with Newbridge and can effectively argue a client’s case regarding their Newbridge account losses.

In June, 2015, the firm was fined $22,500 and censured for failing to adequately report information regarding the purchase and sale transaction of municipal securities.  As part of that fine and censure, the Finra regulator also found that Newbridge’s supervisory system did not provide for supervision reasonably designed to achieve compliance with respect to certain applicable securities laws and regulations.  The firm was ordered to revise the firm’s written supervisory policies.

Newbridge consented to $138,000 in sanctions and the entry of findings that it bought and sold corporate bonds with its customers but failed to buy and sell those bonds at a price that was fair, taking into consideration all relevant circumstances, including market conditions with respect to the bond, the expense involved, and a reasonable profit to the firm.  The firm failed to use reasonable diligence to ascertain the best price under market conditions.  The firm failed to execute orders fully and promptly.  The firms supervisory system did not provide for supervision reasonably designed to achieve compliance with the securities laws.  Certain customers received monetary restitution from the firm as part of the Award, Waiver & Consent.

Newbridge failed to establish, maintain and enforce adequate written supervisory procedures for the review and approval of outgoing wires for customers regarding the transfer of funds or securities by a customer to a bank account.  While the firm had some guidelines, they were silent as to how such transfers were to be reviewed and approved.  During the time of the deficiency, a Newbridge stockbroker converted over $160,000 in funds from two Newbridge customers, by wiring the funds from their account to bank accounts he opened in their names.   That stockbroker is a former broker of the firm at this time.  Newbridge was fined $32,500 for the inadequate supervision.  (See Finra 2013035775601).

Newbridge has been found to charge handling fees to certain state customers that were not properly or fully disclosed.  Newbridge was ordered to disgorge the fees as restitution.  (See S-13-0038 Arkansas)

Newbridge’s fee schedule provided to customers stated that it would charge a “handling fee” of up to $49.95″ during 2009 and 2009 and “$39.99″  during 2010 and 2011.  The fee charged to certain state customers varied up to $59.99.  Newbridge failed to disclose to its customers that the charged “handling fee” was not uniformly charged to all customers, was not based on the costs of handling a particular transaction, included a provided to the firm, and included a rebate to the stockbrokers and branch offices (i.e. part of the payment of the handling fee went to the stockbroker and the stockbroker’s office).  Newbridge’s practice of charging the “handling fee” resulted in substantial profits to both Newbridge and its agents.  Newbridge’s misstatements and omissions were material to investors and its failure to adequately disclose the nature of the “handling fees” made the firm’s disclosures to customers misleading.  Newbridge was fined $15,000 and ordered to make restitution.  (See 2012-006 New Jersey)

Newbridge has been found by security regulators to have failed to establish and maintain a system to supervise the activities of each stockbroker that was reasonably designed to achieve compliance with securities laws and regulations.  This failure to adequately supervise violated various Florida securities laws.  Newbridge violated Florida state law section 517.161(1)(H), Florida Rule 69W-600.013(1)(H)1, and other sections of law and regulation. Newbridge was ordered to cease and desist from any and all future violations, and pay a fine of $40,000.  (See Florida 0700-S-1/13.

Newbridge has been found by securities regulators to have violated rules about charging customers “handling fees” that were improper.   By Exchange Act Rule 10B-10, Finra Rule 2010, and  Rules 2110 and 2430 improper fees cannot be charged to customers.  But Newbridge charged handling fees, in addition to a commission, on trades and its characterization of the charge as being for handling was improper.  The firm’s handling fee charges varied in amount from trade to trade, but the particular dollar amount charged was not attributable to any specific cost or expense incurred by the firm, or by any formula applicable to all custoers.  It was just determined by the stockbroker, who had discretion to set the dollar amount for the fee within a range set by the firm.  Customers of Newbridge from different branch offices might pay substantially different amounts on otherwise identical trades.  While the statements identified the fee as a handling fee, a part of the fee actually served as a source of additional transaction based remuneration revenue to the firm, in the same manner as a commission, and was not directly related to any specific handling of the firm.  By calling part of the fee a handling fee when it was actually in the nature of commission, the firm falsely designated the amount of commissions and misstated the nature handling fee.  (See Finra 2012032048401).–


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