Sagepoint Financial, Inc., a brokerage firm headquartered in Phoenix, Arizona, has been censured and fined $75,000.00 by Financial Industry Regulatory Authority (FINRA) by consenting to findings that the firm failed to apply sales charge waivers on customers’ purchases of mutual funds when customers were eligible, and failed to supervise the application of sales charge waivers. Letter of Acceptance, Waiver and Consent, No. 2017054229301 (Dec. 20, 2017).
According to the AWC, from January 1, 2011 to September 30, 2017, the firm did not apply mutual fund sales charge waivers to purchases made by customers that were eligible for them. Evidently, the firm instead executed sales of class A mutual fund shares containing an up-front sales load, or placed them in costlier class B or C mutual fund shares.
The AWC stated that the firm did not supervise the sales charge waiver application for mutual fund sales. Apparently, financial advisors were called upon by the firm to make determinations of sales charge waivers that applied to transactions; however, the firm never furnished reasonable procedures or written policies to advisors to help them make the waiver determinations. The AWC stated that no written procedures had been established by the firm to detect when applicable waivers had been referenced in mutual fund prospectuses.
The AWC additionally revealed that the firm did not provide adequate notification to advisors or train them when sales charge waivers were available for customers, and had not set forth protocols to identify when the waivers were not provided. FINRA found that the firm’s supervisory failures in this respect were violative of FINRA Rules 2010 and 3110, and NASD Conduct Rule 3010.
According to the AWC, an examination had been conducted by the firm in May of 2016 to identify the extent to which it failed to provide waivers to customers. Evidently, one-hundred forty accounts contained purchases of mutual fund shares where waivers should have been applied but were not. Consequently, since January 1, 2011, customers were disadvantaged by overpaying an estimated $170,361.00.
FINRA Public Disclosure confirms that Sagepoint Financial has been referenced in eleven additional regulatory infractions as well as eleven customer initiated investment related arbitration claims pertaining to accusations of the firm’s improper business activities.
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