Finra hits another veteran broker for ITU sales

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November 23, 2020

The Financial Industry Regulatory Authority’s ongoing campaign to curb abuse of sales allegations involving short-term mutual fund trade in accounts receivable led 23-year-old senior advisor to agree to a fine of $ 10,000 and a three-month suspension.

Kurt J. Gunter, an Austin, Texas-area broker with no disciplinary history, accepted penalties for allegedly recommending more than 270 ITU early renewals – almost half in virtually identical portfolios – in order to generate commissions over three years while employed at Stifel Nicolaus, according to an acceptance letter Finra accepted on Friday.

Gunter, who left Stifel in August 2017 to join the private client group of Wells Fargo Advisors, also passed on misleading information in “surrogate letters” to clients about the costs they would incur by underestimating the commissions of $ 2,500 on average, depending on the letter. .

Gunter, who worked at Raymond James and Morgan Keegan – which RayJay acquired – before joining Stifel in 2013, could not immediately be reached for comment. The broker, whose suspension will begin in December, accepted the Finra sanction without admitting or denying the specific findings.

Finra began conducting targeted reviews of ITU sales, which include creation and development fees as well as upfront and deferred fees, in 2016, and highlighted their concerns in several review priority letters. Companies ranging from wire houses like Morgan Stanley to regional ones like Raymond James Financial and Oppenheimer & Co. have paid regulators millions of dollars in fines and agreed to reimburse customers for failing to properly oversee sales of ITU.

Stifel himself agreed in May to pay more than $ 3.6 million for allegedly providing inaccurate information about the costs of the rollovers and related surveillance violations.

Finra’s settlement letters with companies do not specify individual brokers, who, like Gunter, are often the subject of subsequent enforcement actions. In its May settlement, St. Louis-based Stifel agreed to pay a fine of $ 1.75 million and reimburse 1,700 customers for ITU violations.

ITUs, which are typically intended to be held for 24 months, incur a high selling charge of up to 4.0%, according to Finra’s settlement letters. Premature rollovers may add an additional 2.95% commission.

Gunter’s business recommendations violated Finra’s adequacy rule, which in turn triggers a charge of violating its 2010 rule requiring member companies and associates to observe “high standards of business honor. and fair and equitable trade principles ”.

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