By Matthias Rieker
Wall Street's self-regulator ordered three of the nation's
biggest brokerages to pay more than $30 million in restitution to
clients allegedly overcharged on mutual-fund sales.
The wealth-management units of Wells Fargo & Co., Raymond
James Financial Inc. and LPL Financial Holdings Inc. failed to
waive mutual-fund sales fees for certain retirement-plan customers
and charitable organizations, the Financial Industry Regulatory
Authority Inc. said Monday.
Wells Fargo will have to pay about $15 million, Raymond James
$8.7 million, and LPL $6.3 million.
The restitution follows a similar order against Merrill Lynch
last year. Finra ordered the Bank of America Corp. unit in June
2014 to pay an $8 million fine and $24.4 million in restitution to
settle allegations that it improperly applied mutual-fund sales
charges to certain accounts.
Mutual-fund companies provide sales-charge waivers for
retirement plans to keep them in line with Employee Retirement
Income Security Act rules that are designed to reduce conflicts of
interest.
But the various waiver programs can be difficult to manage.
Wells Fargo, Raymond James and LPL don't have to pay a fine
because the firms themselves discovered that the fees had been
charged to its customers and they then reported the problem to
Finra.
Still, the firms failed to adequately supervise the sale of
mutual funds that offered sales charge waivers, Finra said.
"The firms unreasonably relied on financial advisors to waive
charges for retirement and eligible charitable organization
accounts, without providing them with critical information and
training," the regulator said.
Finra's enforcement chief, Brad Bennett, said the regulator "is
ordering meaningful restitution to adversely affected investors
consistent with our commitment to ensure that mutual fund investors
get the full benefit of available fee and expense reductions."
A spokesman for Raymond James said the firm "proactively
initiated client refunds and self-reported the findings."
An LPL spokeswoman said the firm "has begun providing
restitution to affected investors as well as implementing process
changes to further protect investors for this issue in the
future."
Wells Fargo declined to comment.
All three firms consented to the restitution without admitting
nor denying Finra's charges.
Write to Matthias Rieker at matthias.rieker@wsj.com
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