INVEST Financial Corporation, headquartered in Tampa, Florida, was censured and fined $175,000.00 by the Financial Industry Regulatory Authority (FINRA) for failing to apply sales charge discounts to eligible customers’ purchases of unit investment trusts; and for failing to develop and manage the appropriate supervisory practices to ensure eligible customers received sales charge discounts on UIT purchases. Letter of Acceptance, Waiver and Consent, No. 2014041838301 (Apr. 28, 2016).
The AWC stated that from May 1, 2009 through April 30, 2014, INVEST did not detect and apply UIT discounts when customers were eligible to receive such. According to the AWC, 2,809 UIT purchases were eligible for discount that INVEST failed to apply. Consequently, INVEST’s customers were excessively charged approximately $398,401.30. FINRA found that INVEST’s conduct in this regard was violative of FINRA Rule 2010.
According to the AWC, sponsors of unit investment trusts (UITs) provide investors several methods to receive a sales charge discount pertaining to UIT purchases. The AWC stated that breakpoints are a common method, which is applied when investors increase the size of UIT investments. Another common method indicated in the AWC includes discounts that are applied when customers’ rollover or exchange funds into UIT investments.
The AWC further stated that INVEST lacked the appropriate supervisory procedures and systems to detect when UIT discounts would be applicable. FINRA found INVEST’s conduct in this regard to be violative of FINRA Rules 2010 and NASD Conduct Rules 3010(a) and (b). FINRA imposed a censure and fine, while additionally ordering INVEST to provide the affected customers with restitution of $398,401.30 to address the discounts that INVEST failed to apply.
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