The Financial Industry Regulatory Authority (“FINRA”) entered into a Letter of Acceptance, Waiver and Consent (“AWC”) with First Allied Securities, Inc. (CRD #32444, San Diego, California) on August 21, 2017 arising from the firm’s practices with respect to mutual fund sales charges. FINRA censured First Allied and required the firm to provide FINRA with a remediation plan for eligible customers for mutual fund sales-charge waivers. First Allied also agreed in the AWC to pay restitution to eligible customers, which is estimated to total approximately $876,915 (the amount eligible customers were allegedly overcharged, with interest).
FINRA alleged that First Allied disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. FINRA alleged that these eligible customers were instead steered toward Class B or C fund shares, or Class A shares with a front-end sales charge, resulting in the customers’ paying higher charges than necessary to purchase the shares.
FINRA also alleged that First Allied failed to apply available fee waivers to mutual fund purchases made by eligible customers. Finally, FINRA alleged that First Allied failed to establish and maintain a supervisory system sufficient to accurately determine the applicability of sales-charge waivers.