Founded in 1982, Prospera Financial Services (“PFS”) is an independent broker-dealer headquartered in Dallas, Texas. PFS is a subsidiary of Prospera Financial, LLC. According to its website, the firm has 163 advisors and 76 Back Office staff throughout 94 locations. PFS also has $16B in total assets under management (AUM). 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 Prospera Financial Services
PFS 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.
PFS and brokers backed by PFS have a history of misconduct. According to FINRA’s BrokerCheck report, PFS has 14 disclosures (10 regulatory events; 3 arbitrations; and 1 bond).
In August 2016, the United States Securities and Exchange Commission (SEC) initiated a claim against PFS for misstatements that were made to some of its advisory clients, including clients with separately managed accounts invested in a strategy offered by F-Squared Investments, Inc. (“F-Squared”). From September 2011 to October 1, 2013, PFS advertised this strategy by negligently relying on F-Squared’s misrepresented over-inflated performance track record. PFS failed to obtain sufficient documentation to substantiate F-Squared’s advertising claims. As a result, PFS was ordered to pay a penalty of $100,000.
Other reasons for the many fines that have been levied against PFS over the years include:
- Breach of fiduciary duty
- Failure to supervise
- Unauthorized trading
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