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FINRA Requests Information in Mutual Fund Waiver Sweep

The Financial Industry Regulatory Authority (FINRA) is requesting documents and information from brokerage firms in order to conduct a targeted exam related to mutual fund overcharges.

They are requesting that the firms provide the requested documents and information, dated from January 1, 2011 through December 31, 2015, to FINRA staff by June 10, 2016.

The documents and information requested includes:

  • Were mutual funds sold to retirement plans or charitable accounts?
  • Were mutual fund sales charge waivers offered to eligible accounts?
  • Are there process and supervisory controls in place to ensure that mutual fund sales charge waivers are provided to eligible accounts?
  • Were there any changes to the process and supervisory controls?
  • Has the firm initiated a look back assessment to determine any missed sales charge waivers to eligible accounts?
  • Were mutual funds sold that offered R shares to eligible customers?
  • Are there process and supervisory controls in place to ensure R shares are offered to eligible accounts?
  • Copies of any training materials given to supervisory personnel or sales staff specific to R shares or mutual fund shares.

Over the past year, FINRA ordered nine different broker-dealers to pay restitution totaling over $48 million for allegedly failing to provide or offer sales charge waivers to eligible accounts. The firms ordered to pay restitution in the past year includes:

  • Wells Fargo ($15 million)
  • Edward Jones ($13.5 million)
  • Raymond James ($8.7 million)
  • LPL Financial ($6.3 million)
  • Stifel Nicolaus & Co. ($2.9 million)
  • Janney Montgomery Scott ($1.2 million)
  • Axa Advisors ($600,000)
  • PNC Investments ($225,000)
  • Stephens Inc. ($150,000)

According to the notice, “This inquiry should not be construed as an indication that FINRA or its staff has determined that any violations of federal securities laws or FINRA, NASD, NYSE, or MSRB rules have occurred.”

The Financial Industry Regulatory Authority (FINRA) is requesting documents and information from brokerage firms in order to conduct a targeted exam related to mutual fund overcharges.

They are requesting that the firms provide the requested documents and information, dated from January 1, 2011 through December 31, 2015, to FINRA staff by June 10, 2016.

The documents and information requested includes:

  • Were mutual funds sold to retirement plans or charitable accounts?
  • Were mutual fund sales charge waivers offered to eligible accounts?
  • Are there process and supervisory controls in place to ensure that mutual fund sales charge waivers are provided to eligible accounts?
  • Were there any changes to the process and supervisory controls?
  • Has the firm initiated a look back assessment to determine any missed sales charge waivers to eligible accounts?
  • Were mutual funds sold that offered R shares to eligible customers?
  • Are there process and supervisory controls in place to ensure R shares are offered to eligible accounts?
  • Copies of any training materials given to supervisory personnel or sales staff specific to R shares or mutual fund shares.

Over the past year, FINRA ordered nine different broker-dealers to pay restitution totaling over $48 million for allegedly failing to provide or offer sales charge waivers to eligible accounts. The firms ordered to pay restitution in the past year includes:

  • Wells Fargo ($15 million)
  • Edward Jones ($13.5 million)
  • Raymond James ($8.7 million)
  • LPL Financial ($6.3 million)
  • Stifel Nicolaus & Co. ($2.9 million)
  • Janney Montgomery Scott ($1.2 million)
  • Axa Advisors ($600,000)
  • PNC Investments ($225,000)
  • Stephens Inc. ($150,000)

According to the notice, “This inquiry should not be construed as an indication that FINRA or its staff has determined that any violations of federal securities laws or FINRA, NASD, NYSE, or MSRB rules have occurred.”

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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