FINRA Fines Colorado Financial Service Corporation $45,000 for Supervisory Failures

Colorado Financial Service Corporation has agreed to pay a $45,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA). The firm also faces a censure and must pay $29,049 in restitution plus pre-judgment interest.

According to FINRA, from March 2021 to at least February 2023, Colorado Financial failed to reasonably supervise and maintain reasonably designed policies and procedures regarding recommendations to purchase closed-end funds (CEFs) that invested in high-yield, below-investment-grade debt securities. Some of these CEFs were leveraged, and all were inconsistent with customers' investment profiles.

The firm violated Exchange Act Rule 15l-1(a)(i) (Regulation BI) and FINRA Rules 3110 and 2010.

Colorado Financial has been a FINRA member since December 2000. Headquartered in Centennial, Colorado, the firm employs 35 registered representatives across 13 branch locations. Its primary lines of business include investment banking, private placement of securities, and the sale of equities, mutual funds, variable life insurance, and annuities.