World Group Securities - Lawsuits

Lawsuits

Some state securities officials, including those in Iowa, Alabama, Missouri, Utah, and Minnesota, have filed lawsuits to bar inappropriate sales practices by World Financial Group (WFG) and World Group Securities (WGS). In addition, a number of customers have filed private arbitration claims.

• A 2004 National Association of Securities Dealers (NASD) disciplinary action report summarized disciplinary actions against World Group Securities. According to the report, WGS "submitted a Letter of Acceptance, Waiver, and Consent in which the firm was censured and fined $15,000. Without admitting or denying the allegations, the firm consented to the described sanctions and to the entry of findings that the firm permitted representatives to act in registered capacities while their registrations were inactive due to their failure to satisfy the Regulatory Element of NASD's Continuing Education Requirements. NASD also found that the firm failed to establish and maintain a supervisory system reasonably designed to assure compliance with the Regulatory Element of the Continuing Education Requirement by its registered representatives."

• In December 2006, World Group Securities and one of its brokers were fined $150,000 by Missouri's commissioner of securities for selling unsuitable products to elderly people. Other cases of private arbitration "where variable annuities were allegedly sold to people too old to realize any benefit before they died" were also reported. Utah’s Division of Securities has cited at least four World Group Securities brokers since 2006.

• In April 2007, World Group Securities was fined $50,000 for failing to supervise its representatives in the State of Utah, who were misrepresenting their credentials and services rendered during free lunch seminars targeting seniors.

• In June 2007, a couple filed an NASD arbitration claim against World Group Securities, alleging misrepresentation that caused them to lose over $500,000 on investment products that were unsuitable for their risk tolerance. A judge sided with the couple and forced the company into arbitration over the proceedings, and a settlement was reached.

• In April 2010, World Group Securities was fined in excess of $850,000 as the result of the unauthorized sale of private securities by some of its agents in the State of Arizona.

• In May 2010, the U.S. Securities and Exchange Commission (SEC) filed a federal case against two former brokers of World Group Securities, accusing them of having raised approximately $14,800,000 through the offer and sale of promissory notes as part of an illegal Ponzi scheme in the States of Ohio and Florida between September 2005 and December 2008.

• In November 2010, the U.S. Securities and Exchange Commission (SEC) ordered World Group Securities to pay, among other things, a civil monetary penalty in the amount of $200,000 for the fraudulent selling of unsuitable securities in the State of California, which were funded using home equity, derived from the refinance of the customers' homes into subprime mortgages.