6

H2C Securities Fined $250,000 by FINRA Over Failed Communication Reviews

Have you ever feared the old saying, “A bad penny always turns up?” For investors, a more frightening rendition might be, “A bad financial advisor always turns up – on your portfolio’s bottom line.” It’s been researched and suggested that on average, bad financial advisors could cost you up to 23% of your wealth over 20 years.

This bring us to the case of H2C Securities, which was recently slapped with a quarter million dollar fine by the Financial Industry Regulatory Authority (FINRA). Why? For their failure to preserve and review an eye-watering 1.25 million business-related electronic communications across four platforms, the vast majority of which were mass marketing emails.

If you’re an investor, cases like this underline the importance of being attentive to the actions of your chosen financial advisor. Now, let’s dive into the specifics to understand exactly what happened with H2C Securities.

Peering Deeper into the Missteps of H2C Securities

According to FINRA’s findings, from at least January 2013 to June 2021, H2C Securities exhibited serious flaws in their management and supervision of electronic communications. The issue wasn’t just limited to emails, but also encompassed internal and external memos, instant messages, mass marketing materials and even documents requiring customers’ electronic signatures.

The root of the problem wasn’t a handful of isolated incidents or minor missteps. Rather, according to FINRA, the proverbial shoe didn’t fit.

  • Their supervisory system wasn’t designed to meet the demands of swiftly changing communication platforms.
  • The written supervisory procedures were insufficient, causing a failure to capture, retain, and review communications on multiple platforms.

Connecting The Dots

I’ve simplified and condensed H2C Securities‘ shortcomings for you. When a company entrusted with your investments doesn’t demonstrate rigor and careful stewardship, it’s a potential red flag. I can’t stress enough how crucial transparency and meticulous attention to detail are in this world of finance.

Here’s a seemingly simple, yet oft-overlooked truth: strong governance isn’t about ticking boxes. It goes far beyond that. It’s about instilling a culture where all employees understand their responsibilities when it comes to preserving and monitoring communications. This ensures more safe, compliant, and effective operations, which ultimately protect you – the investor.

I hope this post has given you some food for thought when looking at your current financial advisor or as you search for a new one. Always bear in mind — not all that glitters is gold, and not all that’s expensive is worth it. To answer the original question, yes, a bad advisor can negatively affect your portfolio’s bottom line.

But don’t let fear guide you. You can navigate the labyrinth of financial advisory services undaunted, equipped with the right knowledge – like understanding the importance of a firm’s communication policies and how they could impact you. Remember the lesson that the H2C Securities incident has left us with – effective, transparent, and comprehensive communication governance matters.

Here’s to your financial success, with diligence and a dash of good judgment.

Scroll to Top