MutualFundWire.com: Un-Waived A Shares Loads Land Five More B-Ds In $18MM of Hot Water

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Wednesday, October 28, 2015

Un-Waived A Shares Loads Land Five More B-Ds In $18MM of Hot Water

Un-waived loads on mutual fund A shares continue to bite broker-dealers, big and small. And again, cooperating with the regulators paid off.

J. Bradley Bennett
FINRA
Executive Vice President of Enforcement

Yesterday Finra ordered five more B-Ds — AXA Advisors, Edward Jones, Janney Montgomery Scott, Stephens Inc., and Stifel Nicolaus — to pay more than $18 million in combined restitution to settle charges of "failing to waive mutual fund sales charges for eligible charitable organizations and retirement accounts" that were sold A shares of mutual funds. Notably, the five B-Ds didn't admit or deny the charges as part of the settlement, and they didn't pay any fines, either.

"Cooperation credit was granted to those firms that were proactive in identifying and remediating instances where their customers did not receive applicable discounts," states Brad Bennett, executive vice president and chief of enforcement at Finra.

The new settlements follow similar, fine-free settlements that Finra sealed three months ago with other five big B-Ds: LPL, two arms of Raymond James, and two arms of Wells Fargo. The July settlements and the ones from yesterday both contrast sharply with Finra's first case on this subject: in June 2014 Finra ordered Merrill Lynch to pay $97.2 million, including an $8 million fine, over similar charges involving un-waived mutual fund loads. B-Ds, Finra seems to be sending a clear message: try to fix your mistakes and tell them about it, and you avoid a fine.

InvestmentNews, Reuters, the Wall Street Journal, and WealthManagement.com all reported on the new settlements.

Among the B-Ds that just settled, the biggest, Edward Jones, also will pay the most in restitution, $13.5 million. Stifel will pay $2.9 million, Janney will pay $1.2 million, AXA will pay $600,000, and Stephens will pay $150,000.

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