Newbridge Securities Corporation, headquartered in Boca Raton, Florida, was censured and fined $115,000.00 by Financial Industry Regulatory Authority (FINRA) after consenting to findings that the firm failed to apply sales charge discounts to eligible customers’ purchases of unit investment trusts (UITs); and failed to develop and manage supervisory practices and protocol to make sure eligible customers received sales charge discounts on UIT purchases. Letter of Acceptance, Waiver and Consent, No. 2014042542501 (June 15, 2016).
According to the AWC, from May 1, 2009 through April 30, 2014, Newbridge had not identified and applied UIT discounts when certain customers were eligible for receiving them. Consequently, Newbridge’s customers were excessively charged an estimated $172,835.29.00 in connection with 915 UIT purchases. FINRA found that Newbridge’s failure to provide customers with discounts 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 eligible UIT purchases. The AWC stated that breakpoints are common practice, and applied when investors increase the size of UIT investments. Another common method, according to the AWC, constitutes discounts that are applied when customers’ rollover or exchange funds into UIT investments.
The AWC stated that it was not until June 2015 that Newbridge developed and implemented supervisory practices for purposes of ensuring customers were in receipt of eligible discounts on the UIT products. As such, FINRA found that the firm violated FINRA Rule 2010 and NASD Conduct Rules 3010(a) and (b).
Newbridge Securities Corporation has been subject to disciplinary action in the past in connection with securities transactions. Specifically, in 2013, the firm was censured and fined $50,000.00 after consenting to findings that the firm overcharged customers through excessive handling fees. As a result, the firm was ordered by FINRA to make revisions to firm procedures pertaining to disclosure and calculation of transaction based fees.
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