Five financial advice firms will pay $18 million to settle charges by the Financial Industry Regulatory Authority that they failed to waive mutual fund sales charges for retirement accounts and charitable organizations, the agency announced Tuesday.
The order calls for $13.5 million in restitution from Edward D. Jones & Co., $2.9 million from Stifel Nicolaus & Co., $1.2 million from Janney Montgomery Scott, $600,000 from AXA Advisors and $150,000 from Stephens Inc.
The firms neither admitted nor denied the charges, which included failing to adequately supervise the sale of mutual funds that offered sales charge waivers.
“The firms unreasonably relied on financial advisers to waive charges for retirement and eligible charitable organization accounts, without providing them with critical information and training,” FINRA said in the order.
FINRA's latest action follows similar orders for restitution in July against Wells Fargo Advisors and Wells Fargo Advisors Financial Network, Raymond James & Associates and Raymond James Financial Services, and LPL Financial to pay restitution for similarly failing to waive mutual fund sales charges for certain charitable and retirement accounts.
Between the two actions, more than 75,000 eligible retirement accounts and charitable organizations will receive $55 million in restitution.
The mutual fund investors “were not afforded the full benefit of available sales charge waivers,” said Brad Bennett, FINRA executive vice president and chief of enforcement, in a statement. Firms that proactively identified and remediated such cases received cooperation credits, he said.
Mutual funds often waive their upfront sales charges on Class A shares for certain types of retirement accounts but FINRA found that, since at least July 2009, the firms cited did not always do so, or subjected the accounts to higher ongoing fees and expenses.
