Attention, fundsters: Can you guess what types of cases drew more ire from the Financial Regulatory Authority
and resulted in disiplinary actions last year by the agency?
If you guessed alternative investments and Ponzi schemes, guess again. Based on the disciplinary actions and fines reported in Finra's monthly reports, mutual-fund cases accounted for nearly one-fourth of Finra's fines last year, or about $12 million, according to the Wall Street Journal's Fund Track column
citing a study from law firm Sutherland Asbill & Brennan.
Suitability allegations, which included sales of certain mutual-fund classes, finished a close second with $11.9 million in fines while Other top enforcement cases included variable products ($6.5 million in fines) and licensing ($5.6 million).
However, enforcement priorities and actions concerning bogus sales to seniors and retirees, alternative investments, private placements and Ponzi schemes reportedly didn't make the list of top fine-generating enforcement issues in 2009. The agency is indeed making a concerted effort to rein in mutual fund shenanigans. FINRA last week reportedly asked the Commodities Futures Trading Commission to require mutual funds that trade futures contract to register with the agency. Stay tuned.
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