B.C. Ziegler, a Wisconsin Broker-Dealer headquartered in Chicago, was recently sanctioned for violating several Financial Industry Regulatory Authority (“FINRA”), National Association of Securities Dealers (“NASD”), and Municipal Securities Rulemaking Board (“MSRB”) rules. The allegations all related to the sale of various Church Bonds and Senior Living Bonds without providing a fair and balanced sales presentation.
The complaint states that:
B.C. Ziegler used Church Bond sales material with customers that was not fair and balanced. The sales material prominently promoted the yields associated with Church Bonds without balancing the presentations by disclosing the risks associated with these bonds. As a result B.C. Ziegler violated NASD Rule 2210(d)(1)(A) and FINRA Rule 2010.
The Church bonds at issue required payments from the various religious organizations into what is called a “sinking fund.” The basis of the sanction stemmed from the fact that B.C. Ziegler was receiving monthly reports from the trustees of the sinking funds identifying Church Bond issuers who were delinquent with their sinking fund payments. In March of 2009, B.C. Ziegler’s Chief Credit Officer created a Credit Watch List that tracked Church Bond issuers that were five or more weeks behind on sinking fund payments. Despite knowing this information, B.C. ZIegler did not inform its registered representatives, trading desk, or customers when an issuer was more than 30 days behind on its sinking fund payments.
FINRA found:
B.C. Ziegler also distributed unbalanced internal-use-only Church Bond sales material to its registered representatives, causing the Firm to violate NASD Rule 2211(d)(1) and FINRA Rule 2010…B.C. Ziegler [also] violated NASD Rule 3010 by failing to establish and maintain a supervisory system reasonably designed to ensure that material economic information, such as delinquent sinking fund payments, was disclosed to the FIrm’s sales staff and customers who were sold Church Bonds in secondary market transactions.
B.C. Ziegler was also sanctioned for its misleading advertisements related to the promotion and sale of Senior Living Bonds issued by B.C. Ziegler. FINRA found that the Senior Living Bonds issued by B.C. Ziegler were municipal securities and that the advertisements issues by B.C. ZIegler did not adequately disclose the risks associated with the investments.
B.C. Ziegler violated MSRB Rule G-21 by disseminating 101 Senior Living Bond advertisements… that promoted bond yields without disclosing that the bonds were non-rated or explaining the risks accompanying the high returns of such non-rated bonds. Promoting the Senior Living Bond yields without adequately disclosing the risks associated with those yields made the advertisements misleading.
The firm was fined $150,000.
If you have purchased either Church Bonds or Senior Living Bonds from B.C. Ziegler or are the victim of some other exaggerated and unbalanced sales presentation for securities you have purchased, give us a call at 414-271-3400 or send an e-mail to Sean Sweeney at sms@hallingcayo.com
Sean M. Sweeney is a shareholder at Halling and Cayo, a full service law firm in Milwaukee, WI and the head of its Securities Litigation team.
He represents individual and institutional investors in FINRA arbitration and court nationwide. He recovers investment losses from fraud or breach of duty from their broker-dealer.
Contact him at (414) 755-5020 or via e-mail at SMS@hallingcayo.com to see if he can help recover your funds.