The Financial Industry Regulatory Authority (FINRA0 has ordered three financial firms to pay more than $8.2 million in restitution to customers.
FINRA found that the three companies — Edward Jones, Osaic Wealth, and Cambridge Investment Research – failed to provide available mutual fund sales charge waivers and fee rebates on mutual fund purchases.
FINRA noted that it did not impose any fines in connection with these matters in recognition of each firm’s extraordinary cooperation with FINRA’s investigations.
“Obtaining restitution for harmed customers is a top priority for FINRA. It is essential that firms ensure their customers receive all fee waivers and rebates owed,” Bill St. Louis, executive vice president and head of enforcement at FINRA, said. “At the same time, FINRA recognizes firms that proactively correct errors, identify and repay harmed investors and provide substantial assistance to FINRA during its investigations.”
FINRA explained that many mutual fund issuers offer a right of reinstatement. This allows investors to reinvest in shares of a fund or fund family after previously selling shares without incurring a front-end sales charge, or to recoup all or part of a contingent deferred sales charge.
Each of the three firms failed to establish and maintain a supervisory system reasonably designed to supervise whether eligible customers received available mutual fund sales charge waivers and fee rebates through rights of reinstatement. As a result, customers did not receive the rights of reinstatement benefits to which they were entitled, totaling over $8.2 million.
Specifically, Edward Jones customers paid $4,440,979 in excess sales charges and fees; Osaic Wealth customers paid $3,096,490 in excess sales charges and fees; and Cambridge Investment Research customers paid $699,217 in excess sales charges and fees.
Each of the firms agreed to repay affected customers, including interest.
In settling these matters, the three firms consented to the entry of FINRA’s findings, without admitting or denying the charges.
As previously noted, each firm demonstrated extraordinary cooperation by voluntarily initiating an extensive review of their relevant systems, practices and procedures; engaging an outside consultant to identify disadvantaged customers and calculate restitution; and establishing a plan to efficiently identify, notify and repay customers eligible for restitution.