The U.S. Financial Industry Regulatory Authority has settled with five firms over improper mutual fund sales and related supervisory violations.

The violations include improper sales of Class B and Class C mutual fund shares and failure to have supervisory systems designed to provide all eligible investors with the opportunity to purchase Class A mutual fund shares at net asset value.

For the share class sales violations, FINRA imposed an US$800,000 fine against Prudential Securities and a US$750,000 fine against UBS Financial Services, Inc. for improper sales of Class B and Class C mutual fund shares. A US$100,000 fine was imposed against Pruco Securities for improper sales of Class B shares. In resolving the Class B and Class C share matters, these firms also agreed to remediation plans that will address over 27,000 fund transactions in the accounts of 5,300 households.

To resolve the NAV violations, Merrill Lynch, Prudential Securities, UBS and Wells Fargo agreed to remediation plans for eligible customers who qualified for, but did not receive, the benefit of NAV transfer programs. It is estimated that total remediation to customers will exceed US$25 million.

In addition, FINRA fined Prudential Securities, UBS, and Merrill Lynch US$250,000 each for failure to have reasonable supervisory systems and procedures to identify and provide opportunities for investors to obtain sales charge waivers through NAV transfer programs.

“Firms have an obligation to consider all relevant factors when recommending mutual fund investments, to ensure that they recommend the share class that is most advantageous to the customer,” said Susan Merrill, executive vice president and chief of enforcement. “The supervisory problems here led not only to the sales of inappropriate mutual fund share classes, but to the failure to identify special sales charge waiver programs on mutual fund purchases. We are pleased that through these settlements, millions of dollars will be returned to customers.”

Each firm settled these matters without admitting or denying the allegations, but consented to the entry of FINRA’s findings.