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FINRA fines broker-dealer for failing to apply Class A sales charge waivers for certain eligible customers on its mutual fund platform

Richard F. Kerr (Counsel at Goodwin Procter LLP, Boston, Massachusetts, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 28 October 2014

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Abstract

Purpose

To review FINRA enforcement action taken against a broker-dealer over failure to waive mutual fund sales charges for certain eligible customers and failure to establish, maintain, and enforce a supervisory system and written procedures reasonably designed to ensure eligible accounts received sales charge waivers as set forth in the mutual funds’ prospectuses.

Design/methodology/approach

Reviews and summarizes FINRA’s finding’s regarding the broker-dealer’s failure to apply applicable mutual fund sales charge waivers, deficiencies in the broker-dealer’s supervisory system and written procedures resulting in the failure, resulting violations of FINRA rules, the broker-dealer’s remedial efforts, and the sanctions imposed.

Findings

This settlement provides an important reminder for FINRA member broker-dealers of the need to ensure that eligible investors receive applicable sales charger waivers or are placed in the appropriate share class, and to establish, maintain, and enforce a supervisory system and written procedures reasonably designed to ensure eligible accounts received sales charge waivers as set forth in the mutual funds’ prospectuses.

Originality/value

Practical explanation from experienced financial institutions lawyers.

Keywords

Acknowledgements

© 2014 Goodwin Procter LLP

This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys.

Citation

F. Kerr, R. (2014), "FINRA fines broker-dealer for failing to apply Class A sales charge waivers for certain eligible customers on its mutual fund platform", Journal of Investment Compliance, Vol. 15 No. 4, pp. 53-56. https://doi.org/10.1108/JOIC-09-2014-0045

Publisher

:

Emerald Group Publishing Limited

Copyright © 2014, Authors