Finance 500 Inc. Broker Misconduct

Founded in 1982, Finance 500, Inc. provides investment products and financial services to a large and diverse clientele. According to the firm’s website, Finance 500 operates independently to provide its customers in a pressure-free environment. Finance 500 has its headquarters in Irvine, California, and holds 15 branch offices across the country. Its 80 registered brokers service clients in all 50 states.

In April 2009, Finance 500 consented to a censure and fine of $15,000 from FINRA. The complaint alleges Finance 500, between April 2006 and June 2006, bought or sold securities at prices deemed by the National Association of Securities Dealers (NASD) to be unfair. Most of the municipal securities purchased by Finance 500’s account were marked down as much as 4.9%.  That’s not exactly conducive to creating a pressure free environment for investors.

Nor is the first time that Finance 500 has disciplined. FINRA has reported six different rule violations dating back to 2004. In addition, complaints levied from former clients have resulted in awards totaling over $200,000.

FURTHER READING:

Finance 500 supervised illegal stock option plans for 35 companies

From October 2002 through August 2005, Finance 500 Inc. acted as broker for a number of invalid company stock option programs. The Securities and Exchange Commission (SEC) executed a cease and desist order against Finance 500 in August 2008, alleging that the company acted on the behalf of 35 companies that were unregistered, and ordered $271,484 to the United States treasury. Finance 500 settled the complaint and agreed to the fine, including an additional $74,015 in interest.

In its record of the proceeding, (http://www.sec.gov/litigation/admin/2008/33-8950.pdf) the SEC claims Finance 500 repeatedly ignored red flags which would have indicated these stock holdings were improper. The 35 issuer companies sold massive number of shares in unregistered company offerings that were in violation of federal securities laws, using the money from its employees to raise capital.