PNC Investments Censured by FINRA for Lack of Supervision

• July 12, 2025
• PNC Investments LLC

PNCI is a broker-dealer headquartered in Pittsburgh, PA and has been a member of FINRA since December 2003.

Allegations of Misconduct

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), from at least June 2021 to the present, PNCI failed to establish and maintain a supervisory system, including WSPs, reasonably designed to monitor rates of deferred VA exchanges. The firm’s supervisory system did not require the firm to assess its representatives’ rates of exchanges. Instead, when supervising VA exchanges, the firm relied on transaction-by-transaction supervisory approvals, along with a data visualization dashboard—not addressed by the firm’s WSPs—that regional supervisors could use on an ad-hoc basis to calculate rates of exchange.

 

Furthermore, the firm’s supervisory system did not require supervisors to track or perform any further review of representatives with exchange rates that raised for review whether their conduct was inconsistent with applicable FINRA rules or the federal securities laws, nor did the firm do so despite several representatives having such rates of exchanges during this period. The firm also did not provide guidance to assist supervisors in evaluating whether representatives’ exchange rates warranted further review or for them to otherwise assess representatives’ aggregate exchange activity.

 

VAs are complex investments containing securities and insurance features that permit investors to choose among a variety of contract features and options. Due in part to the complexity of these products, FINRA requires that firms provide more comprehensive and targeted protection to investors who purchase or exchange variable annuities.

 

Therefore, Respondent violated FINRA Rules 3110, 2330, and 2010, and consented to the imposition of the following sanctions:

• A censure;
• A $200,000 fine; and
• an undertaking that, within 90 days of the date of the notice of acceptance of this AWC, a member of Respondent’s senior management who is a registered principal of the firm shall certify in writing that, as of the date of the certification, the firm has remediated the issues identified in this AWC and implemented a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rule 2330 regarding the issues identified in this AWC.

For a copy of the FINRA Letter of AWC, click here.

For a copy of PNCI’s FINRA BrokerCheck, 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.

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.

Excessive trading often occurs when a Financial Advisor puts his or her interests ahead of the clients and makes transactions solely for the purpose of generating commissions. Financial Advisors have a regulatory duty to recommend suitable investment strategies. One of the components of the suitability analysis is quantitative suitability.

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. 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.

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.