National Planning Corporation is one of the nation’s largest broker-dealer networks. A subsidiary of National Planning Holdings, Inc., the company was founded in 1998 and is headquartered in Santa Monica, California. National Planning Corporation provides access to products and advisory services through independent investment professionals.
Misconduct, Negligence, and Lack of Supervision
Unfortunately, National Planning Corporation is not above violating the rules of the Financial Industry Regulatory Authority (FINRA), and it has been levied fines in two disciplinary actions in the last decade. In 2006, National Planning representatives were not trained or supervised well regarding the sale of Class A, B, and C shares. The vital difference between these shares, in this case, is the sort of fees that they carry and their investment purpose.
For example, Class C shares have significantly larger fees for holding them, so they are ideal for short-term investments. Representatives did not sell these shares in the best interests of clients, sometimes trading Class C shares to clients who were investing over $100,000 long-term (making them ideal for Class A shares, with lower long-term percentage-based fees). National Planning Corporation was fined $315,000 for trading that favored the pockets of brokers, not clients.
Only a year prior, National Planning Corporation was part of a multi-firm action that accused large firms of trading for the sake of the firm, not for the sake of the investors. In this case, these firms, including National Planning, provided higher commissions for the sale of certain stock, rewarding representatives for clearing certain investments over others. This is a direct violation of FINRA laws because it encourages representatives to behave in their own interests.
Because this is a crucial rule to ensure an honest, transparent financial industry, National Planning was fined $1.2 million, in addition to a $100,000 fee for other violations. The other firms were fined in varying amounts, but National Planning was fined the second-largest amount for their part in the arrangement. Massive fines are intended to deter other firms from engaging in dishonest behavior, ideally creating a healthier financial industry.
Investors Have the Right to File Claims
Because National Planning Corporation is licensed by FINRA, they are subject to the laws that FINRA enforces. One crucial law is that National Planning is responsible for ensuring that their brokers are trading ethically, transparently, and in the best interest of their clients. They ideally accomplish this through careful supervision and vigilance. If a representative from National Planning loses your assets through negligence or fraud, it immediately puts National Planning at fault for failing to supervise their broker. FINRA law then dictates that you can hold the firm legally liable to recover your damages.