FINRA Orders Colorado-based Geneos Wealth Management to Pay $400k

INVESTORS: FINRA censured and fined Colorado-based broker-dealer Geneos Wealth Management for alleged failures in supervising its registered representatives’ recommendations.

FINRA censured and fined a Colorado-based broker-dealer following allegations that Geneos Wealth Management failed to properly supervise its representatives. According to FINRA, the misconduct occurred between November 2016 and February 2018. The representatives reportedly recommended investments in LJM Preservation & Growth Fund, an alternative mutual fund only suitable for investors with a high-risk tolerance. FINRA alleged that Geneos failed to ensure that its representatives understood the risks and features of the fund.

According to FINRA’s allegations, Geneos’ representatives sold over $2.5 million in LJM to more than 80 customers. One representative purportedly sold approximately 60% of the total. In February 2018, LJM’s value plunged 80% amid an extreme volatility event. The Fund liquidated its assets and closed the following month.

Additionally, between April 2018 and June 2018, Geneos representatives reportedly failed to tell three investors in an offering connected to GPB Capital Holdings that the issuer did not submit audited financial statements and other filings to the SEC in a timely manner. FINRA alleged that Geneos earned $11,550 in commissions from at least three sales of limited partnership interests in Automotive Portfolio, one of GPB’s limited partnerships. Without admitting or denying the findings, Geneos consented to a censure and paid a fine of $150,000, along with $251,000 in restitution. 

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