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FINRA 529 Plan Share Class Initiative encourages firms to self-report violations

Susan Light (Katten Muchin Rosenman LLP, New York, New York, USA)
James Normile (Katten Muchin Rosenman LLP, New York, New York, USA)
Leonard Licht (Katten Muchin Rosenman LLP, New York, New York, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 21 August 2019

Issue publication date: 16 October 2019




To explain FINRA’s new 529 Plan Share Class Initiative, which encourages broker-dealers to self-report violations.


This article provides an overview of 529 plans, the various fee structures of the underlying investment funds, and guidance that broker-dealers should tailor their recommendations to the needs of the individual customer. The article discusses FINRA’s initiative for broker-dealers to self-report if they have violations in this area. It describes various supervisory failures brokerage firms may experience in connection with recommending 529 plans, eligibility for the self-reporting initiative and benefits of self-reporting.


This FINRA initiative provides an opportunity for firms to reflect on their supervisory systems and provide restitution to harmed customers. It also provides relevant fee-based investment information to customers.

Practical implications

529 plans are valuable tax-advantaged tools to encourage saving for the future educational expenses of a designated beneficiary. If brokerage firms lack reasonable supervisory procedures to recommend appropriate investments based on the length of the investment horizon, this FINRA initiative provides a unique and limited opportunity for firms to assess their supervisory systems and procedures governing 529 Plan share-class recommendations, to identify and remediate any defects, and to compensate any investors harmed by supervisory failures, while possibly avoiding fines for such conduct.


Expert guidance from experienced financial services regulatory and public finance lawyers.



Light, S., Normile, J. and Licht, L. (2019), "FINRA 529 Plan Share Class Initiative encourages firms to self-report violations", Journal of Investment Compliance, Vol. 20 No. 3, pp. 20-22.



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Copyright © 2019, Katten Muchin Rosenman LLP.

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