FINRA Orders Restitution In First Allied Securities Mutual Fund Sales Charge AWC

The Financial Industry Regulatory Authority (“FINRA”) entered into a Letter of Acceptance, Waiver and Consent (“AWC”) with First Allied Securities, Inc. (CRD #32444, San Diego, California) on August 21, 2017 arising from the firm’s practices with respect to mutual fund sales charges.  FINRA censured First Allied and required the firm to provide FINRA with a remediation plan for eligible customers for mutual fund sales-charge waivers.  First Allied also agreed in the AWC to pay restitution to eligible customers, which is estimated to total approximately $876,915 (the amount eligible customers were allegedly overcharged, with interest).

FINRA alleged that First Allied disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge.  FINRA alleged that these eligible customers were instead steered toward Class B or C fund shares, or Class A shares with a front-end sales charge, resulting in the customers’ paying higher charges than necessary to purchase the shares.

FINRA also alleged that First Allied failed to apply available fee waivers to mutual fund purchases made by eligible customers.  Finally, FINRA alleged that First Allied failed to establish and maintain a supervisory system sufficient to accurately determine the applicability of sales-charge waivers.

FINRA estimates that First Allied caused eligible customers to be overcharged by approximately $769,054 for mutual fund purchases as a result of the foregoing issues.

Brokerage firms are required to adequately supervise their personnel to ensure they are complying with FINRA rules while they are registered with the firm. If they fail to do so, the firms can be held responsible for the activities of their representatives and, thus, could be ordered to compensate their clients for losses sustained for the period they were registered with the firm.

Depending on their individual circumstances, investors who believe that they may have been charged excessive fees by a stockbroker or financial advisor may be able to recover losses through FINRA arbitration.  Investors may contact the attorneys at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.