Broker-dealer to pay $225,000 for mutual fund sales violations

PNC Investments, a broker-dealer and registered investment advisory arm of PNC Financial Services Group Inc., has agreed to pay restitution of almost $225,000 for overcharging retirement clients in connection with mutual fund purchases.
Since at least July 2009, PNC Investments failed to apply waivers for investors in some Class A share mutual funds, even though a waiver of front-end sales charges in the funds was available to eligible customers and disclosed in fund prospectuses, according to a disciplinary action document signed Apr. 11 by the Financial Industry Regulatory Authority Inc.’s Department of Enforcement.
Rather, PNC Investments, which has approximately 2,300 registered representatives, sold these customers Class A shares with a front-end load or Class B or C shares with a back-end load and higher ongoing fees and expenses, “causing such customers to pay higher fees than they were actually required to pay,” the document said.
As a result, PNC Investments overcharged 121 customer accounts by approximately $191,740 for mutual fund purchases, estimated to total $224,750 including interest, which PNC Investments has agreed to pay in restitution to eligible investors, according to Finra.
The lapses were self-reported by PNC Investments following a review the broker-dealer conducted in July 2015 to determine if PNC Investments was providing available sales waivers.
PNC Investments also had supervisory lapses, according to Finra, for failing to maintain “adequate written policies or procedures” to help financial advisers determine when to apply sales waivers. PNC Investments also failed to adequately notify advisers when waivers were available, and didn’t adopt adequate controls to detect instances when sales waivers weren’t applied during a mutual fund purchase, Finra said.
A PNC spokeswoman declined to comment, citing the firm’s policy not to comment on legal or regulatory matters.

Related Topics: Broker-Dealers