Founded in 1983, Sigma Financial Corporation (“Sigma”) is an independent broker-dealer headquartered in Ann Arbor, Michigan. Sigma offers mutual funds, fixed annuities, insurance, retirement plans, stocks, bonds, other securities products, and financial planning and brokerage services.
As of 2020, the firm had 618 representatives, $18B+ in assets under management (AUM), and $130.8M in total revenue. Sigma’s 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 Sigma Financial
Sigma 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.
Sigma and brokers backed by Sigma have a long history of misconduct. Per FINRA’s BrokerCheck report, the firm has 26 disclosures (15 regulatory events and 11 arbitrations).
In September 2020, the New York State Department of Financial Services brought a claim against Sigma alleging that the firm provided materially incorrect information on its original application to act as a life broker. Sigma paid a $2,500 fine after it was found that the firm failed to disclose that during the approximate period of October 5, 2001 to November 15, 2019:
- Sigma and its owner and president, Jerome Rydell, were named in at least 55 NASD and FINRA arbitration proceedings involving allegations of breach of fiduciary duty, fraud, or misrepresentation;
- Sigma and Rydell were defendants in two civil litigations involving allegations of breach of fiduciary duty, fraud, or misrepresentation;
- Sigma was fined a total of 14 times by NASD/FINRA, four state insurance regulators and one state securities regulator; and
- Sigma violated a previous order pertaining to insurance law, by not taking the necessary steps to prevent the violations from recurring.
In March 2019, FINRA initiated a claim against Sigma finding that the firm failed to establish, maintain, and enforce a supervisory system to comply with securities law and regulations and FINRA rules related to the sale of leveraged, inverse, and inverse-leveraged exchange-traded funds (non-traditional ETFs).
Specifically, Sigma lacked any written materials for guidance to representatives for determining the suitability of non-traditional ETF products. Furthermore, representatives were not trained on the unique risks and features of non-traditional ETFs. This resulted in customers holding non-traditional ETFs in their accounts for long periods of time, which is typically inappropriate. The firm lacked a system that would alert it to these extended holding periods. The firm was censured and fined $100,000.
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Meyer Wilson reclaimed $350 million for the victims of investment fraud or misconduct. Our attorneys are experienced in going up against the largest investment firms, such as Sigma Financial, and our track record affirms our resources and expertise. Meyer Wilson has represented clients nationwide and internationally, in state and federal courts, and in securities arbitration through FINRA and the American Arbitration Association (AAA). As an investor, you have a right to recover investments lost through unethical behavior or decisions made against your interests.