Founded in 1999, NEXT Financial Group, Inc. (“NEXT”) is an independent broker-dealer and registered investment adviser headquartered in Houston, Texas. As of February 2023, the firm had 435 registered representatives and 15,664 clients of various types, though well over half are individuals. It also has $3.1B+ in assets (all discretionary). Owned by NEXT Financial Holdings, Inc. its brokers are licensed in all 50 states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Financial Misconduct at NEXT Financial Group, Inc.
NEXT is licensed by the Financial Industry Regulatory Authority (FINRA), and as such is legally obligated to ensure its brokers are acting lawfully in the interest of their investors. If a client suffers losses as a result of negligent behavior or misconduct from a broker, then the firm may be held legally responsible to repay the damages.
NEXT and brokers backed by NEXT have a history of misconduct. FINRA’s BrokerCheck report lists 32 disclosures for the firm (26 regulatory; 3 arbitrations; and 3 bonds).
In late 2019, NEXT was hit with fines totaling $475,000 for issues related to non-traded REITs. In December 2019, NEXT was fined $235,000 as well as the costs of the investigation ($90,000) after the New Hampshire Bureau of Securities Regulations initiated a claim against the firm for actions allegedly occurring between 2009 and 2016. During this time, NEXT was found to have sold non-traded REITs to a number of clients:
That same month, Massachusetts brought a claim against NEXT for very similar actions. It was alleged that between January 2007 and December 2017, the firm approved of the sale of non-traded REITs by a registered representative who exceeded the firm’s concentration guidelines for non-traded REITs. As a result, NEXT was censured and fined $150,000.
In July 2021, NEXT was censured and fined $750,000 after FINRA found that the firm failed to detect that one of its brokers, who from 2012 through 2019, was engaged in short-term trading of mutual funds A shares and municipal bonds, which are both designed as long-term investments since they have higher up-front sales commissions. The broker also overconcentrated a number of customers, including senior citizens. As a result, 19 customer accounts incurred unnecessary sales charges totaling approximately $925,000 and losses of approximately $4.1M.
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