BD Expected To Pay Over $10 Million in Fines and Restitution for Fund and UIT Sales Practices
FINRA fined a large BD more than $4.5 Million related to mutual fund and UIT sales. The fines are in addition to returning over $5 Million to investors and agreeing to future remediation on thousands of other transactions. According to FINRA, the firm failed to observe breakpoint discounts, provide discounts in NAV transfer programs, ignored rollover discounts, and recommended unsuitable purchases of Class B and Class C shares.
OUR TAKE: These are big numbers. When the fines move into the seven figures, it means that FINRA wants the industry to notice. We expect that FINRA is getting weary having to bring the same suitability case against different BDs for failing to offer customers the benefit of breakpoints, load waivers, and transfer programs. FINRA has been warning the industry for at least 7 years that firms need to implement appropriate policies and procedures to avoid these problems.