$18M to FINRA by 5 Firms for Overcharging Funds

Five broker-dealers have been ordered by the Financial Industry Regulatory Authority to pay more than $18 million in restitution for overcharging charities and retirement funds on mutual fund sales. Among the broker-dealers are Edward D. Jones & Co. LP and Stifel Nicolaus & Co. Inc.

The firms failed to waive sales charges on the mutual funds. To date, FINRA has collected $55 million in restitution to return to 75,000 eligible accounts.

“These actions are further evidence of our commitment to pursue substantial restitution for adversely affected mutual fund investors who were not afforded the full benefit of available sales charge waivers,” says FINRA’s Executive Vice President and Chief of Enforcement, Brad Bennett.

FINRA reports that the firms each agreed to waive upfront sales charges on class A mutual fund shares purchased by charities and certain types of retirement accounts. However, FINRA has said that the firms did not always waive the charges when they offered the class A shares. This resulted in 25,000 eligible retirement accounts and charitable organizations either paying fees that should have been waived or purchasing other share classes with higher ongoing fees. The firms also failed to properly supervise the sale of mutual funds that offered the waivers.

Edward Jones agreed to pay $13.5 million in restitution; Stifel Nicolaus $2.9 million; Janney Montgomery Scott LLC $1.2 million; AXA Advisors LLC $660,000; and, Stephens Inc. $150,000. The firms neither admitted nor denied the charges.

The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.