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FINRA Mutual Fund Sweep Claims Sanctions Against 9 More Firms
February 21, 2018
by Howard Haykin
Since April 2017, FINRA has reported disciplinary sanctions against 21 broker-dealers that inappropriately sold expensive shares of mutual funds to retirement plan and charitable organization customers - nine (9) of which were cited in February 2018.
Each case offered the same scenario: institutional customers were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. Yet, the customers were sold classes of mutual fund shares that carried sales charges - i.e., front-end, back-end, and/or high 12b-1 fees. As a result, these “eligible customers” overpaid on mutual fund fees and expenses.
From April through October 2017, 12 B/D’s were ordered to reimburse their customers nearly $11 million in overcharges plus pre-judgment interest. Three of those firms were hit with fines totaling $195,000. In February 2018, 9 B/D’s were ordered to reimburse customers over $2.25 million in overcharges plus pre-judgment interest. Four of those firms were hit with fines totaling $400,000.
HERE'S THE LINEUP FOR FEBRUARY 2018 and respective settlements :
- FSC Securities Corp'n (Atlanta, GA) - $100K in fines, ~$381K in restitution, $34K in interest.
- Royal Alliance Associates (Jersey City, NJ) - $150K in fines, ~$459K in restitution, $61K in interest.
- SagePoint Financial (Phoenix, AZ) - $75K in fines, ~$170K in restitution, $26K in interest.
- Woodbury Financial Services (Oakdale, MN) - $75K in fines, ~$114K in restitution, $25K in interest.
- BB&T Investment Services (Charlotte, NC) - $-0- in fines, ~$332K in restitution, $41K in interest.
- Investacorp (Miami, FL) - $-0- in fines, ~$215K in restitution, $33K in interest.
- Investors Capital Corp. (Lynnfield, MA) - $-0- in fines, ~$377K in restitution, $61K in interest.
- J.P. Turner & Company (Atlanta, GA) - $-0- in fines, ~$176K in restitution, $37K in interest.
- VSR Financial Services (Overland Park, KS) - $-0- in fines, ~$40K in restitution, $8K in interest.
