SEC Files Charges Against First Horizon Advisors

First Horizon Advisors (CRD# 17117[1]) failed to maintain policies reasonably designed to achieve compliance with Regulation Best Interest, according to a Securities and Exchange Commission sanction. MDF Law is investigating the Memphis, Tennessee-based broker-dealer firm for similar conduct. If you have concerns about transactions in your accounts, contact us for a free consultation.

SEC: Firm Failed to Comply with Regulation Best Interest

On September 18, 2024, the SEC announced charges[2] against First Horizon Advisors. According to a litigation release published by the regulator, the charges alleged that the firm failed “to maintain and enforce policies and procedures reasonably designed to achieve compliance with Regulation Best Interest.” This regulation[3] requires broker-dealer firms to act in their customers’ best interests when recommending products or strategies. As the litigation release notes, the charges specifically stem from First Horizon’s structured note recommendations.

The firm’s failures to achieve compliance with Regulation BI occurred in “multiple ways,” per the SEC. In one case, the firm allegedly migrated 5,000 customer accounts from the system of a firm with which it merged. “Because of incompatibilities in the two systems,” the SEC alleged, “First Horizon did not have accurate customer information necessary to review structured note recommendations for compliance with First Horizon’s Reg BI policies and procedures.” 

Furthermore, the brokers who joined from the latter firm were unable to access First Horizon’s “exception reporting site.” This is the system where brokers look over structured note transactions identified as non-compliant. Finally, the SEC’s order alleged that in 2023, the broker-dealer approved investment recommendations “without all the documentation required by its Reg BI policies and procedures.”

First Horizon Advisors Pays 6-Figure Penalty

First Horizon agreed to resolve these charges by paying a civil penalty of $325,000, according to the SEC. In a statement regarding the charges, an SEC official stressed the importance of Regulation Best Interest. “To help reduce the chance of retail customer harm, Reg BI requires broker-dealers to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with Reg BI as a whole,” he said. “This action underscores that broker-dealers must ensure appropriate compliance around complex financial products and that it is not enough to simply have written policies; firms must also enforce them.”

Investors Have Rights. MDF Law Defends Them

If you lost money investing in structured notes or products recommended by First Horizon, you may have grounds to pursue damages. Contact MDF Law[5] at 800-767-8040 to speak with our team about whether the FINRA arbitration process is right for your case. We accept cases on a contingency basis, meaning our clients only pay a fee if they win. The firm currently offers free consultations nationwide. Your time to file a claim may be limited, so call today.