RBC Capital Markets LLC, headquartered in New York, New York, was censured and fined $225,000.00 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 requisite supervisory practices to ensure eligible customers received sales charge discounts on UIT purchases. Letter of Acceptance, Waiver and Consent, No. 2014042542901 (Apr. 1, 2016).
The AWC stated that from May 1, 2009 through April 30, 2014, RBC did not detect and apply UIT discounts when customers were eligible to receive such. According to the AWC, 4,399 UIT purchases were eligible for discount that RBC failed to apply. Consequently, RBC’s customers were excessively charged approximately $502,088.88. FINRA found that RBC’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 RBC lacked the appropriate supervisory procedures and systems to detect when UIT discounts would be applicable. FINRA found RBC’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 RBC to provide the affected customers with restitution of $502,088.88 to address the discounts that RBC failed to apply.
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