Self-Reporting and Remediating Allows Firm to Avoid Fines
A bank-affiliated broker-dealer agreed to pay restitution and interest, but avoided other financial penalties, by self-reporting mutual fund sales charge violations to FINRA. According to the AWC, the firm began a review of mutual fund sales charges in 2015 and discovered that over 1500 accounts over a 6-year period did not receive mutual fund sales charge waivers to which they were entitled. The respondent agreed to pay over $1.4 Million in restitution and interest. Although FINRA charged the firm with failing to supervise and implement adequate policies and procedures, it did not impose additional penalties in light of the firm’s “extraordinary cooperation” in initiating and detecting the issues, establishing a remediation plan, and self-reporting.
OUR TAKE: What are the implications of self-reporting to regulators? In this case, the firm avoided more significant regulatory penalties, although it was still forced to sign a publicly-available AWC that cites the firm for a series of regulatory violations.