The Washington, D.C.-based Financial Industry Regulatory Authority (FINRA) announced on Tuesday that it has sanctioned 12 securities over their failure to provide clients with the sales charge discounts that they were entitled to receive.
FINRA has ordered the 12 firms to collectively pay restitution of more than US$4 million, and more than US$2.6 million in fines, for failing to apply available discounts to customers’ purchases of unit investment trusts (UITs), along with related supervisory failures.
The firms settled the allegations, neither admitting nor denying the charges, but consented to the entry of the regulator’s findings, FINRA says in a statement.
UIT sponsors generally offer certain discounts to investors, FINRA notes, including “breakpoint discounts” based on the size of the purchase, and “rollover and exchange discounts” for investors that use the redemption proceeds from one UIT to purchase another UIT. Broker-dealers should adopt procedures to ensure customers receive appropriate sales charge discounts, FINRA says.
“Firms need to ensure that their registered representatives are providing customers the sales charge discounts to which they are entitled. The firms sanctioned today failed to provide these discounts, resulting in customer harm in the form of higher costs for which customers have been or will be reimbursed,” says Brad Bennett, executive vice president and chief of enforcement at FINRA, in a statement.