Independent Financial Group, Llc

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A SUPERVISORY SYSTEM REASONABLY DESIGNED TO SUPERVISE EXCESSIVE TRADING AND ASSURE COMPLIANCE WITH REG BI, AND FAILED TO REASONABLY SUPERVISE A REGISTERED REPRESENTATIVE WHO EXCESSIVELY TRADED FIVE CUSTOMERS' ACCOUNTS. THE FINDINGS STATED THAT THE RESPONSIBILITY FOR REVIEWING ALERTS THAT FLAGGED POTENTIAL EXCESSIVE TRADING WAS SHARED BETWEEN COMPLIANCE STAFF AND SUPERVISORY STAFF. THE FIRM'S WSPS MADE COMPLIANCE STAFF, WHO WERE NOT RESPONSIBLE FOR SUPERVISING REGISTERED REPRESENTATIVES, RESPONSIBLE FOR REVIEWING AN EXCESSIVE TRADING REPORT AVAILABLE THROUGH THE FIRM'S CLEARING FIRM. HOWEVER INSTEAD OF REVIEWING THE EXCESSIVE TRADING REPORT, THE FIRM'S COMPLIANCE STAFF REVIEWED AN INTERNAL EXCESSIVE TRADE ALERT, WHICH SUFFERED FROM CERTAIN DEFICIENCIES OF WHICH THE FIRM WAS UNAWARE. THE FIRM'S PROCEDURES FAILED TO PROVIDE REASONABLE GUIDANCE ABOUT HOW COMPLIANCE PERSONNEL SHOULD CONDUCT REVIEW OF EXCESSIVE TRADE ALERTS OR WHEN THEY SHOULD TAKE ACTION BASED UPON THE INFORMATION CONTAINED IN THOSE ALERTS AND DID NOT INCLUDE GUIDANCE ON THE USE OF COST-TO-EQUITY RATIOS OR GUIDANCE ON WHAT TURNOVER RATES COULD SIGNAL EXCESSIVE TRADING. WHEN THE FIRM'S COMPLIANCE STAFF REVIEWED EXCESSIVE TRADE ALERTS, THEY FREQUENTLY CLOSED THEM WITHOUT CONDUCTING FURTHER INVESTIGATION INTO WHETHER THE TRADING WAS CONSISTENT WITH THE CUSTOMER'S BEST INTEREST. IN ADDITION, THE FIRM'S WSPS CONTAINED A PROVISION MAKING SUPERVISORY STAFF RESPONSIBLE FOR IDENTIFYING POTENTIAL EXCESSIVE TRADING THROUGH THEIR OVERALL REVIEW OF CLIENT TRANSACTIONS APPEARING ON TRADE BLOTTERS AND TRADE-BY-TRADE ALERTS. A SENIOR SUPERVISOR AT THE FIRM, HOWEVER, INSTRUCTED SUPERVISORY PERSONNEL TO ASSESS EACH ALERT ONLY AS IT PERTAINED TO THE SPECIFIC TRADE GENERATING THE ALERT. THE FIRM FAILED TO PROVIDE THE FIRM'S SUPERVISORY STAFF WITH PROCEDURES, TOOLS, OR TRAINING TO IDENTIFY POTENTIAL EXCESSIVE TRADING BY ASSESSING ASERIES OF TRANSACTIONS AND PROVIDED NO GUIDANCE TO SUPERVISORS REGARDING WHAT FACTORS MIGHT SUGGEST THAT A REPRESENTATIVE WAS EXCESSIVELY TRADING AN ACCOUNT OR WHAT STEPS THEY SHOULD TAKE IF THEY IDENTIFIED POTENTIAL EXCESSIVE TRADING. A REPRESENTATIVE EXCESSIVELY TRADEDFIVE CUSTOMERS' ACCOUNTS, DIRECTING FREQUENT IN-AND-OUT TRADING AND CAUSING A LEVEL OFTRADING THAT WAS INCONSISTENT WITH THE CUSTOMERS' INVESTMENT PROFILES AND THAT WAS NOT INTHEIR BEST INTEREST OR WAS NOT SUITABLE. COLLECTIVELY, THESE CUSTOMERS PAID MORE THAN $2.2MILLION IN TOTAL TRADING COSTS AND INCURRED REALIZED LOSSES TOTALING APPROXIMATELY $2.2MILLION. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO TIMELY AND COMPLETELY RESPOND TOFINRA RULE 8210 REQUESTS. FINRA SENT THE FIRM A REQUEST FOR, AMONG OTHER THINGS, DOCUMENTATION OF ITS SUPERVISORY REVIEW OF ALL EXCEPTIONS, ALERTS, OR OTHER DOCUMENTS TOSUPERVISE FOR EXCESSIVE TRADING, ACTIVE ACCOUNTS, AND EXCESSIVE COMMISSIONS FOR CUSTOMERSOF THE REPRESENTATIVE. THE FIRM'S RESPONSE TO THAT REQUEST WAS INCOMPLETE BECAUSE IT FAILED TOINCLUDE ANY OF THE EXCESSIVE TRADING REPORTS AVAILABLE THROUGH ITS CLEARING FIRM AND FAILED TO INCLUDE ANY EXCESSIVE TRADE ALERTS THAT HAD STOPPED APPEARING ON THE FIRM'S SYSTEM. FINRA SENT A SERIES OF FOLLOW-UP REQUESTS TO THE FIRM TO ASCERTAIN THE COMPLETENESS OF THE FIRM'S RESPONSE. AFTER MULTIPLE DISCUSSIONS WITH FINRA, THE FIRM CONTACTED THE SERVICE PROVIDER THAT GENERATED THE FIRM'S EXCESSIVE TRADE ALERTS AND BECAME AWARE THAT EXCESSIVE TRADE ALERTS COULD AND HAD STOPPED APPEARING EVEN IF THEY HAD NOT BEEN CLEARED. THE FIRM THEN MADE A COMPLETE PRODUCTION OF ALL EXCESSIVE TRADE ALERTS AND THE EXCESSIVE TRADE REPORTS. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $500,000, AND REQUIRED TO CERTIFY THAT IT HAS REMEDIATED THE ISSUES IDENTIFIED IN THE AWC AND IMPLEMENTED A REASONABLY DESIGNED SUPERVISORY SYSTEM, INCLUDING WSPS. ALL CUSTOMERS HAVE ALREADY EITHER RECEIVED RESTITUTION OR ARE EXPECTED TO RECEIVE FULL RESTITUTION THROUGH A SEPARATE AGREEMENT. Summary: BETWEEN JULY 2020 AND DECEMBER 2022, IFG (1) FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO SUPERVISE ACTIVELY TRADED ACCOUNTS AND ACHIEVE COMPLIANCE WITH REGULATION BI AND FINRA RULE 2111 AS THEY PERTAIN TO EXCESSIVE TRADING, AND (2) FAILED TO REASONABLY SUPERVISE A REGISTERED REPRESENTATIVE WHO EXCESSIVELY TRADED FIVE CUSTOMERS' ACCOUNTS, IN VIOLATION OF FINRA RULES 3110 AND 2010.

Allegations: SEC IA RELEASE 40-5383, SEPTEMBER 30, 2019: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED AGAINST INDEPENDENT FINANCIAL GROUP, LLC ("RESPONDENT"). ON THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF BREACHES OF FIDUCIARY DUTY AND INADEQUATE DISCLOSURES BY THE RESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARE CLASS SELECTION PRACTICES AND THE FEES IT RECEIVED. AT TIMES DURING THE RELEVANT PERIOD, RESPONDENT PURCHASED, RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE. RESPONDENT RECEIVED 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS. RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OR OTHERWISE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES THAT PAY SUCH FEES. DURING THE RELEVANT PERIOD, RESPONDENT RECEIVED 12B-1 FEES FOR ADVISING CLIENTS TO INVEST IN OR HOLD SUCH MUTUAL FUND SHARE CLASSES. AS A RESULT OF THE CONDUCT, RESPONDENT WILLFULLY VIOLATED SECTION 206(2) OF THE ADVISERS ACT. Status: Final Sanction Detail: THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 206(2) OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $1,250,386.58 AND PREJUDGMENT INTEREST OF $175,764.06, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. Summary: RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THE FOREGOING, THE COMMISSION DEEMS IT APPROPRIATE IN THE PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO IN THE RESPONDENT'S OFFER. ACCORDINGLY, IT IS ORDERED THAT RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 206(2) OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $1,250,386.58 AND PREJUDGMENT INTEREST OF $175,764.06, AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. RESPONDENT SELF-REPORTED TO THE COMMISSION THE VIOLATIONS DISCUSSED IN THIS ORDER PURSUANT TO THE DIVISION OF ENFORCEMENT'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE ("SCSD INITIATIVE"). ACCORDINGLY, THIS ORDER AND RESPONDENT'S OFFER ARE BASED ON THE INFORMATION SELF-REPORTED BY RESPONDENT.

Allegations: STATE SECURITIES COMMISSION ALLEGED THAT 2 REPRESENTATIVES IN VIGINIA MADE MATERIAL MISREPRESENTATIONS AND UNTRUE STATEMENTS OF FACTS IN THE OFFER SAND SALE OF ALTERNATIVE INVESTMENTS. ALSO ALLEGED THE BROKER-DEALER DID NOT IMPLEMENT ADEQUATE PROCEDURES TO MONITOR THEIR SALES OF THESE SECURITIES. Status: Final Sanction Detail: FINE - $30000 FEE - $5000 $35000 TOTAL Summary: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, TO AVOID FURTHER EXPENDIUTURE OF TIME, MONEY AND RESOURCES, THE FIRM ENTERED INTO THIS SETTLEMENT ORDER WITH THE STATE ON 6/3/14. ALL PENALTIES AND FEES HAVE BEEN PAID IN FULL.