A broker-dealer settled FINRA charges for share-class recommendations that resulted in clients paying excess fees on their investments.
FINRA found that the broker-dealer failed to establish and maintain an appropriate supervisory system as to recommendations made by representatives for share classes of tax-advantaged state-sponsored securities plans ("529 plans") offered by state sponsors. Specifically, FINRA noted that the supervisory procedures relating to the suitability of 529 plans recommendations failed to require evaluation of beneficiary age, years until expected withdrawal, and the differing fees of each share class.
To settle the charges, the broker-dealer agreed to pay a restitution amount of at least $4 million, and additionally reached a settlement agreement with the State of Maine Office of Securities and a restitution amount of approximately $19 million. FINRA stated that the broker-dealer resolved the matter without a monetary fine as a result of its "extraordinary cooperation."
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