Finra says BB&T overcharged retirement plans, charities

Firm censured, agrees to provide remediation to clients affected

Dec 5, 2017 @ 12:47 pm

By InvestmentNews

The Financial Industry Regulatory Authority Inc. has censured BB&T Investment Services for having overcharged retirement plans and charitable organizations in their purchases of mutual funds.

The firm accepted the censure without admitting or denying Finra's findings, and agreed to create a remediation plan for the clients who were overcharged.

(More: SEC penalizes UBS $3.5 million for overcharging on funds)

Finra said that from at least July 1, 2009, through August 1, 2017, BB&T sold Class A shares with a front-end sales charge or Class B or C shares with back-end sales charges and higher ongoing fees and expenses to certain retirement plan and charitable organization customers who were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge.

During that time, BB&T "failed to establish and maintain a supervisory system and procedures reasonably designed to ensure that eligible customers who purchased mutual fund shares received the benefit of applicable sales charge waivers," Finra said.

(More: Excessive-fee litigation in retirement plan market moving downstream)

BB&T estimates that approximately 865 accounts purchased mutual fund shares for which an available sales charge waiver was not applied. As a result of its failure to sell the appropriate funds, the firm estimates that customers were overcharged approximately $331,983 for mutual fund purchases made since July 1, 2009. As part of its settlement with Finra, BB&T said it has paid restitution of approximately $373,134 to eligible customers.

"We are pleased this matter has been resolved and that Finra recognized the 'extraordinary cooperation' of BB&T Investment Services for proactively addressing the matter and quickly enhancing our policies and procedures," spokesman Brian Davis wrote in an email. "The best interest of our clients has always been, and continues to be, our number one priority."

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