Customers of three firms who were improperly charged for mutual fund sales will be receiving restitution for the money they are entitled to, Advisor Hub reports.
The Financial Industry Regulatory Authority announced that it has ordered the firms,, Edward Jones, Osaic Wealth, Inc., and Cambridge Investment Research, Inc., to pay over $8.2 million to customers who were harmed by the firms’ failures to provide available mutual fund sales charge waivers and fee rebates on mutual fund purchases.
According to FINRA, many mutual fund issuers offer a right of reinstatement, which allows investors to reinvest in shares of a fund or fund family after previously selling shares without incurring a front-end sales charge, or to recoup all or part of a contingent deferred sales charge.
But in this matter, each of the three firms failed to establish and maintain a supervisory system reasonably designed to supervise whether eligible customers received available mutual fund sales charge waivers and fee rebates through rights of reinstatement. As a result, customers did not receive the rights of reinstatement benefits to which they were entitled, totaling over $8.2 million.
Edward Jones customers paid $4,440,979 in excess sales charges and fees; Osaic Wealth customers (and those of its affiliated broker-dealers) paid $3,096,490 in excess sales charges and fees; and Cambridge Investment Research customers paid $699,217 in excess sales charges and fees. Each of the firms agreed to repay affected customers, including interest.
“Obtaining restitution for harmed customers is a top priority for FINRA. It is essential that firms ensure their customers receive all fee waivers and rebates owed,” said FINRA’s Executive Vice President and Head of Enforcement, Bill St. Louis. “At the same time, FINRA recognizes firms that proactively correct errors, identify and repay harmed investors and provide substantial assistance to FINRA during its investigations.”
FINRA did not impose any fines on the firms due to their cooperation with the investigations, which were carried out by Member Supervision’s Examinations and National Cause and Financial Crimes Detection programs. The firms consented to the entry of FINRA’s findings, but did not admit or deny wrongdoing.
Including the most recent settlements, FINRA said it has secured over $9.5 million in restitution for affected mutual fund customers across five firms.
An Edward Jones spokesperson said the company is pleased to have resolved the matter. “We take this matter seriously and have made enhancements to our policies, procedures and practices,” an Edward Jones spokesperson said in a statement.
A spokesperson for Osaic declined to comment. A spokesperson for Cambridge did not immediately respond to a request for comment.
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