Sigma Financial Corporation (CRD #: 14303) is a major brokerage firm headquartered in Ann Arbor, Michigan. This firm, under the same ownership as Sigma Planning Corporation (SPC), is an affiliate of Parkland, servicing about 900 registered representatives who are primarily investment advisors registered with SPC, many of whom are also licensed to sell life insurance and annuities.
The Offerings of Sigma Financial Corporation
Beyond providing access to standard stocks and bonds investment, Sigma Financial Corporation goes the extra mile to offer other financial products that can be described as potentially risky. Investors can get recommendations from Sigma brokers as well as purchase and sell securities. Sigma also signals that customers should make a clear choice between their investment advisory service, their brokerage service or indeed, both, as these services come with their own respective fees.
Paying Attention to Brokerage Account Fees
The honesty of Sigma is seen in the clear outlining of fees associated with their brokerage services. Per-transaction fees, account opening fees, maintenance fees, closing fees, early surrender fees, internal fees, and expenses for funds are some of the charges investors must keep in mind. Investors also need to confirm the details of the products they opt for as some may come with attached surrender charges.
Unraveling Conflicts of Interest
Although Sigma does an excellent job of transparency regarding fees, this openness equally unveils some conflicts of interest. The per-transaction fees could motivate brokers to trade more often than necessary. Furthermore, Sigma receives commissions from insurance companies, mutual funds companies, and other product companies. This invariably means Sigma has a propensity to recommend products that fetch better commissions.
Regulatory Oversight: Sigma Financial Corporation
Unsurprisingly, Sigma Financial Corporation and some of its representatives have faced allegations of misconduct, with a total of 15 regulatory events and 11 arbitration cases recorded on its detailed BrokerCheck record.
Most notably, in 2020, the New York State Department of Financial Services alleged that Sigma provided incorrect information in its application to act as a life broker. Specific details of the allegations included non-disclosure of involvement in various proceedings revolving around breach of fiduciary duty, fraud, or misrepresentation. Also, Sigma had reportedly faced fines from FINRA and other regulators over four state insurance regulators and one state securities regulator.
In a separate allegation involving non-traditional ETFs, Sigma failed to establish and maintain a system designed to manage the sale of these potentially unsuitable investments for clients. This led to a $100,000 fine after entering into an Acceptance, Waiver, and Consent agreement (AWC) with FINRA.
And again in 2016, Sigma faced another $100,000 fine after consenting to allegations that it failed to apply sales charge discounts to eligible UIT purchases, a breach that swindled clients of an excess of $92,000.
Addressing Investor Loss
Losing money while working with any financial broker, including Sigma, can be devastating. This only highlights the importance of seeking professional, legal guidance on securities to help recover some of these losses. Though not all losses can be avoided, sound advice can help in the prevention of avoidable financial loss.