SEC charges Birmingham B-D with churning

The Securities and Exchange Commission and the Alabama Securities Commission announced today that they have charged Aura Financial Services Inc., a Birmingham-based broker-dealer, with churning customer accounts, supervisory failures and other violations.
JUN 12, 2009
The Securities and Exchange Commission and the Alabama Securities Commission announced today that they have charged Aura Financial Services Inc., a Birmingham-based broker-dealer, with churning customer accounts, supervisory failures and other violations. Several of the firm’s senior officers and six registered representatives are included in the complaint. Churning occurs when a broker engages in excessive trading without regard to the customer’s investment objectives for the purpose of generating commissions and other revenue. The SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, alleges that Aura and six registered representatives used fraudulent sales practices and high-pressure sales tactics to convince customers to open and invest money in brokerage accounts, which the brokers subsequently churned. The firm and brokers received $1 million in commissions and fees while they depleted the customers’ accounts, the SEC alleges. For its part, the ASC alleged in an amended order that many of the firm’s representatives had criminal or disciplinary backgrounds and multiple prior customer complaints. Nonetheless, Aura and three of its managers failed to adopt appropriate procedures, enforce rules, conduct branch office inspections or maintain files of complaints, according to the statement. The order gives Aura 28 days to show cause as to why its registration as a broker-dealer should not be revoked or suspended in the state. The SEC is seeking court orders permanently prohibiting all the defendants from engaging in violations of the anti-fraud provisions of the federal securities laws and requiring them to disgorge their ill-gotten gains and pay financial penalties. The SEC’s and the ASC’s investigations continue. A spokeswoman for Aura Financial was not immediately available for comment.

Latest News

Fed's Bowman pushes for lighter-touch AI oversight at smaller firms
Fed's Bowman pushes for lighter-touch AI oversight at smaller firms

Supervision vice chair speaks following recent launch of AI adoption practices by regulators.

Why fixed income still belongs in your clients' portfolios
Why fixed income still belongs in your clients' portfolios

In an era of AI euphoria and market FOMO, getting back to basics with fixed income may be the most contrarian and most important move advisors can make.

Voya expands advisor managed accounts to add private market assets
Voya expands advisor managed accounts to add private market assets

Voya Financial adds private equity, credit and real estate options to its AMA program, building on support for looser federal investment rules in retirement accounts.

With executives leaving, Osaic’s Reid now in the spotlight
With executives leaving, Osaic’s Reid now in the spotlight

Shannon Reid, president of Osaic and the network’s number two executive, has plenty of challenges, industry executives said.

Investors sue crypto fund and platform, alleging $1.5 million never returned
Investors sue crypto fund and platform, alleging $1.5 million never returned

Auditors flagged the commingling. The COO allegedly knew. Investors kept getting the pitch

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.