FINRA adjudicates cases arising from focused reviews on ITU early renewals – Finance and Banking


United States: FINRA resolves cases arising from focused reviews on ITU early renewals

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FINRA reached an agreement with six member companies for “failing to reasonably supervise the first renewals of collective investment funds (” UIT “), which resulted in potentially excessive sales charges for clients. The regulations were the result of a focused review of early ITU renewals.

In a press release on the success of the targeted reviews (or ‘sweep’), FINRA said that “a registered representative who recommends that a client sell their ITU position before the due date and then ‘renew’ these funds in a new ITU result in higher selling costs for the customer than if they had held the ITU to maturity, which raises adequacy issues. “

As a result of FINRA’s review, the various companies that are part of the settlement agreed to pay a total of $ 16.8 million in restitution to approximately 10,000 investors, along with an additional fine of 6.6 millions of dollars.

Primary sources

  1. FINRA Announces Final Results of Targeted Mutual Fund Early Refinancing Review
  2. Focused Review Letter on the Review of Mutual Fund Rollover

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