FINRA Sanctions Oppenheimer & Co. for Failure to Supervise

Oppenheimer & Co. (CRD#: 249)

Broker Dealer’s Background

Oppenheimer is a full-service broker dealer headquartered in New York and has been a FINRA member since 1945.

Allegations of Misconduct

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), between 2012 and 2017, Oppenheimer failed to reasonably supervise transactions that the firm’s registered representatives placed directly with product sponsors on behalf of firm customers in violation of NASD Rule 3010 and FINRA Rules 3110 and 2010.

Oppenheimer was on notice that certain of its representatives were engaging in direct business transactions when it received commission records from product sponsors. Nonetheless, Oppenheimer did not have any system or procedures in place to require registered representatives to report those transactions to the firm. As a result, approximately 490,000 direct business transactions involving over 14,000 customers were not reported on Oppenheimer’s daily trade blotter, which caused the firm to fail to reasonably supervise the suitability of such transactions.

During the same period, Oppenheimer also failed to have a reasonable supervisory system to ensure that it collected and maintained information about its direct business customers’ investment profiles—such as the customers’ ages, investment time horizons, and liquidity needs—that was relevant for making suitability determinations. Oppenheimer relied on its representatives to collect such information by completing new account forms. However, the firm did not take steps to ensure that representatives completed new account forms for new customers placing direct business transactions. As a result, Oppenheimer failed to collect and maintain information about certain direct business customers that was relevant to assessing whether their direct business transactions were suitable.

Starting in 2021, Oppenheimer began a retrospective review of its direct business transactions during the relevant period. That review involved identifying the direct business transactions that Oppenheimer failed to include on its trade blotter and reviewing the transactions according to the parameters used by Oppenheimer’s exception reporting system. Oppenheimer attempted to collect missing information about customers’ investment profiles. The suitability of certain of the transactions could not be determined because the firm was unable to collect complete information at the time of the retrospective review about customers’ investment profiles, including their investment time horizons or liquidity needs that would have been relevant at the time of the purchase.

As a result of the above, Oppenheimer violated Section 17(a) of the Exchange Act, Exchange Act Rule 17a-3, NASD Rule 3010(a), and FINRA Rules 3110(a), 4511 and 2010. Oppenheimer also consented to the imposition of the following sanctions:

  • A censure; and
  • A $500,000 fine.

For a copy of Oppenheimer’s Letter of Acceptance, Waiver and Consent, click here.


We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.


Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.


Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.


Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.


The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.


Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]