FINRA Fines 12 Brokerage Firms $6.7 Million For Overcharging Clients in Unit Investment Trusts (UITs)

A recent press release issued by The Financial Industry Regulatory Authority (FINRA) the regulator announced that it ordered 12 firms to pay restitution totaling more than $4 million and additional fines totaling more than $2.6 million concerning allegations that the firms failed to apply available sales charge discounts to customers' purchases of Unit Investment Trusts (UITs), and other related supervisory failures. FINRA fined the following firms in its action in these amounts.

  • First Allied Securities, Inc. was ordered to pay $689,647 in restitution and fined $325,000.

  • Fifth Third Securities, Inc. was ordered to pay $663,534 in restitution and fined $300,000.

  • Securities America, Inc. was ordered to pay $477,686 in restitution and fined $275,000.

  • Cetera Advisors LLC was ordered to pay $452,622 in restitution and fined $250,000.

  • Park Avenue Securities LLC was ordered to pay $443,255 in restitution and fined $300,000.

  • Commonwealth Financial Network was ordered to pay $357,521 in restitution and fined $225,000.

  • MetLife Securities, Inc. was ordered to pay $349,748 in restitution and fined $300,000.

  • Comerica Securities was ordered to pay $197,757 in restitution and fined $150,000.

  • Cetera Advisor Networks LLC was ordered to pay $151,108 in restitution and fined $150,000.

  • Ameritas Investment Corp. was ordered to pay $128,544 in restitution and fined $150,000.

  • Infinex Investments, Inc. was ordered to pay $109,627 in restitution and fined $150,000.

  • The Huntington Investment Company was ordered to pay $60,973 in restitution and fined $75,000.

As a background, a UIT is a type of investment company that offers redeemable units of a generally fixed portfolio of securities that terminate on a specific date. Generally, UIT issuers offer sales charge discounts to investors or "breakpoint discounts" and "rollover and exchange discounts" that allow customers to pay smaller sales charges if certain criteria are met. A breakpoint discount typically is a reduced sales charge based on whether or not the client purchases larger quantities of shares or principal investment amount. As the customer purchases more of the investment the sales charges decreases. Each program varies in terms of where the breakpoints occur and the amount of discount that is applied by many funds have discounts beginning at $25,000 or $50,000. A rollover or exchange discount is a reduced sales charge that is offered to investors who want to swap or switch UITs.

In March 2004, FINRA issued reminded firms in a notice that they should develop and implement procedures to ensure customers receive appropriate sales charge discounts for UITs. The firms fined by FINRA neither admitted nor denied the charges as part of the settlement but consented to the entry of FINRA's findings.

The investment fraud lawyers of Gana LLP are experienced in representing investors in cases where their broker has acted inappropriately. The firm represents investors who have suffered losses in securities arbitration and other claims. Our consultations are free of charge and the firm is only compensated if you recover.