Rules….rules.

Yeah, well, don’t follow ‘em, you could just find yourself in a bit of tepid water.

In June, five registered representatives or brokers of The Securities and Exchange Commission were charged by the body with violating Best Interest Obligation regulations – known commonly as Regulation Best Interest or Reg BI, according to napa-net.org. The subjects include Nancy Cole, Patrick Egan, Andy Gitipityapon, Steven Graham, and Thomas Swan.

The issue stems from their recommendation and selling of an unrated, high-risk debt security known as L Bonds to retirees and other retail investors. Western sold an aggregate of $13.3 million of L Bonds from July 2020 through April 2021, alleges the SEC complaint. The kicker: many of the customers were on fixed incomes with moderate levels of risk tolerance, while the bonds were high risk, illiquid, and only suitable for customers with substantial financial resources stated the issuer, GWG Holding Inc.

Neither Western nor the registered representatives used reasonable diligence, care and skill to grasp the risks linked with L Bonds, claims the SEC. And it doesn’t stop there. Western also was charged by the SEC of violating Reg Bi’s Compliance Obligation, according to sec.gov/. Western’s policies and procedures were duplicated – and significantly so – from the SEC’s Small Entity Compliance Guide, the SEC charged. As for specific tailoring to Western’s particular business? It had none.