Broker-dealer Essex Censured and Fined for Alleged Unsuitable Mutual Fund Switches

investment fraud recovery attorneysFrom February 2010 through March 2011, Essex Securities, LLC, a FINRA-registered broker-dealer since December 1998 headquartered in Topsfield, MA, allegedly engaged in a pernicious pattern of unsuitable mutual fund switching with the accounts of seven customers, using a representative known only as JT as its alleged wrongdoer, according to a FINRA Letter of Acceptance, Waiver and Consent (AWC).

The AWC further alleges that, on a minimum of 29 instances, JT allegedly recommended that his customers sell mutual funds within only one to thirteen months after purchasing them, and that Essex reportedly earned gross commissions of approximately $60,000 on these switch transactions of which said agent, JT, raked in approximately $54,000.

These customers allegedly held the Class A mutual funds at issue for less than 6 months, and then JT used the revenues from said sales to purchase more mutual funds offered by other fund families for those customers, precipitating these poor customers to pay additional commissions, the AWC also reports.

In addition, Essex, with approximately 50 registered representatives operating out of 26 branch offices, allegedly failed to establish and maintain a proper supervisory system, the AWC further notes.

As a result of the alleged mutual fund switches, and supervisory gaffes, Essex reportedly broke NASD and FINRA Rules, and will accordingly face a censure, a $20,000 fine, and be forced to offer restitution to customers in the amount of$6,009.70, the AWC further reports.

Essex reportedly has no prior disciplinary history with the SEC, any self-regulatory organization, or any state securities regulator.

Investment Recovery Lawyers Investigating

The Peiffer Rosca Wolf investment recovery lawyers often represent investors who lose money as a result of investment misconduct or mutual fund switching. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of investment misconduct or mutual fund switching may contact the investment recovery lawyers at Peiffer Rosca Wolf, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1168 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.