Finra censures Investacorp for laxity on fund sales

Ladenburg Thalmann subsidiary agrees to pay restitution of almost $250,000 for overcharges

Dec 7, 2017 @ 2:49 pm

By InvestmentNews

The Financial Industry Regulatory Authority Inc. has censured Investacorp, a subsidiary of Ladenburg Thalmann Financial Services Inc., for its failure to have proper procedures in place to detect that its reps were selling high-priced funds to investors who could have paid less.

Finra said that between July 1, 2009, and July 5, 2016, Investacorp "disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. Instead, the customers were sold front-end loaded Class A shares or Class B or C shares with back-end sales charges and higher ongoing fees and expenses."

Based on an internal review, Investacorp estimated that approximately 465 customer accounts purchased mutual fund shares for which an available sales charge waiver was not applied. It estimated that customers were overcharged by approximately $215,092 for mutual fund purchases made since July 1, 2009.

As part of its settlement with Finra, Investacorp agreed to pay the eligible customers restitution estimated to total $247,886, which is the amount the customers were overcharged, including interest.

(More: Finra notes compliance pitfalls in first-time release of exam findings)


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