The Financial Industry Regulatory Authority says that another five firms must pay restitution to specific retirement and charitable accounts for overcharging them for mutual funds. Edward D. Jones will pay $13.5M, Stifel Nicolaus (SF) will pay $2.9M, AXA Advisors will pay $600K, Janney Montgomery Scott will pay $1.2M, and Stephens Inc. will pay $15K.
The announcement comes just a few months after the self-regulatory organization fined five other firms over $30M for similar violations. Those firms were LPL Financial LLC (LPL), Raymond James Financial Services (RJF), Raymond James & Associates, Wells Fargo Advisors Financial Network, LLC (WFC), and Wells Fargo Advisors, LLC. Due to their purported oversight, over 50,000 charitable organizations and retirement accounts ended up paying too much for their mutual fund shares.
Several share classes are available through mutual funds. Different charges for sales and fees apply. Class A shares typically come with lower yearly fees than that of Class B and Class C shares. However, Class A shares do charges an initial sales fee as well. That said, the mutual funds will waive upfront fees for certain kinds of retirement accounts and charities.
According to FINRA, even though mutual funds on the firm’s platforms offered these waivers at certain points for several years, the firms charged this time did not waive the charges. Over 25,000 eligible charities and retirement accounts ended up paying sales charges that should have been waived when they purchased Class A shares or bought other share classes that subjected them to higher fees and expenses that weren’t needed.
The regulator also says that the firms did not adequately supervise the mutual fund sales at issue and instead depended on financial advisers it did not properly train to waive the sales charges.
Although the firms are settling, they are not denying or admitting to the charges.
At The SSEK Partners Group, our institutional investor fraud law firm helps charities, retirement plans, large trusts, corporations, banks, partnerships, financial firms, municipalities, private foundations, school districts, and high net worth individuals recoup their losses.