Osaic Hit with $250,000 FINRA Fine Over Supervision Failures

In a major regulatory action, FINRA has levied a $250,000 fine against Osaic Services for failing to properly supervise trading activities. This sanction comes after an investigation revealed serious oversight problems at the firm, previously known as SagePoint Financial, during a period spanning from mid-2018 through 2019. This decision highlights growing concerns about brokerage firms’ duty to protect their clients from excessive and unsuitable trading practices.

What Led to the Fine?

The investigation exposed deeply concerning failures in Osaic’s approach to options trading supervision. Despite having automated systems in place to protect investors, the firm allowed brokers without proper expertise to bypass these essential safeguards. These oversight gaps created an environment in which risky trading practices could flourish, leaving clients vulnerable to significant financial harm. Equally troubling was the firm’s pattern of disregarding its own warning systems–automated alerts designed to flag potentially harmful trading were routinely dismissed without proper review.

How Were Investors Affected?

The consequences of these supervisory breakdowns proved severe for investors. The firm’s customers collectively faced losses exceeding $1 million while simultaneously being charged tens of thousands in trading fees and commissions. In one concerning case, a client’s account was subjected to trading that put them at risk for losses more than 22 times their stated liquid worth. In another distressing case, trading continued in a client’s account even after their death, generating unnecessary losses and commission charges for their estate.

Previous Regulatory Issues

This isn’t Osaic’s first encounter with regulatory scrutiny over supervision matters. The firm faced similar issues just last year, suggesting a potentially deeper pattern of compliance challenges. This history adds weight to FINRA’s current enforcement action and underscores the importance of proper broker oversight.

Are You an Affected Investor?

For individuals who held accounts with Osaic (formerly SagePoint) during the relevant period, certain red flags may indicate you were impacted by these supervision failures:

• Frequent options trading in your account
• Trading that exceeded your stated risk tolerance
• High commission charges and trading costs
• Trading activity you didn’t authorize
• Unexplained changes in account value

Understanding how these supervisory failures may have affected your account is an important first step in protecting your financial interests.

How Girard Bengali Can Help

Securities regulations exist to protect investors from supervision failures. When brokerage firms fall short of their obligations, affected investors have legal rights and potential paths to recovery.

Our investment recovery attorneys at Girard Bengali law firm specialize in cases involving broker misconduct and supervisory failures. We have extensive experience representing investors in FINRA arbitration proceedings and have successfully recovered significant damages for clients who have suffered losses due to inadequate supervision and unauthorized trading.

If you were an Osaic/SagePoint customer during this period, please contact us to discuss your potential claims. Through a confidential consultation, our team can evaluate your individual situation and help determine the best path forward.