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.
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.
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.
Practical explanation from experienced financial institutions lawyers.
© 2014 Goodwin Procter LLP
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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
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