Securities Fraud Blog | Find out if your broker is liable for your losses

TAG | UIT sales charge discount

Dec/10

7

Ryan Beck & Co, & Stifel Nicolaus & Co, Censured and Fined by FINRA

Comments off · Posted by admin in FINRA

It was stated on the FINRA website that the firms Ryan Beck & Co. (CRD #3248, Florham Park, New Jersey) nka Stifel Nicolaus & Company, Incorporated (CRD #793, St. Louis, Missouri) and Consent was censured, fined $100,000, agreed to provide remediation to customers who purchased unit investment trusts (UITs) and qualified for, but did not receive, the applicable sales charge discount, and will submit to FINRA a proposed plan of how it will identify and compensate customers and a schedule detailing the total dollar amount of restitution provided to each customer. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to establish an effective supervisory system and written supervisory procedures reasonably designed to ensure that discounts were correctly applied on eligible UIT purchases. The findings stated that the firm’s written supervisory procedures had limited information regarding UIT sales charge discounts, and omitted the fact that certain UIT sponsors permitted exchange discounts for purchases made with the proceeds from a UIT holding of another sponsor; this was particularly relevant because the firm’s UIT business was almost exclusively with UIT sponsors that provided this sales charge discount. 
 The FINRA findings also stated that the firm’s procedures lacked substantive guidelines, instructions, policies or steps for brokers, trading personnel or supervisors to follow to determine if a customer’s UIT purchase qualified for, and received, a sales charge discount. The findings also included that the broker and firm compensation diminished when the customer received a sales charge discount and, because of this, the firm needed to be particularly diligent in providing guidance to brokers, supervisors and trading personnel on UIT sales charge discounts.

It was noted that FINRA found that the firm failed to provide eligible customers with appropriate discounts on both UIT rollover and breakpoint purchases. FINRA also found that the firm failed to identify and appropriately apply sales charge discounts in certain top-selling UITs and, as a result, the firm overcharged customers in the sample approximately $20,000. FINRA also determined that the firm sold UITs that imposed a deferred sales charge that was generally charged upon redemption if a customer sold a UIT before the deferred sales charges were imposed. Moreover, FINRA found that the firm failed to ensure that its customers’ UIT purchase confirmations included the required language stating that “on selling your shares, you may pay a sales charge. For the charge and other fees, see the prospectus.”

 Additionally, FINRA found that the firm misstated on certain UIT confirmations that a sales charge discount had been applied when, in fact, it had not. 

(FINRA Case #2008015700901)

This information was obtained from FINRA’s website.

If you feel you have been a victim of these alleged fraudulent schemes of  Ryan Beck & Co., or Stifel Nicolause & Co., call a Securities Arbitration Lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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