Advisor Group firms settle with Finra over 529 plan rollovers

Advisor Group firms settle with Finra over 529 plan rollovers
According to Finra, the broker-dealers fell short in giving some clients breaks when rolling over 529 plans from one state to another.
JAN 27, 2023

Three Advisor Group broker-dealers reached a settlement this week with the Financial Industry Regulatory Authority Inc. to pay $515,000 in restitution to clients, plus interest, over the firms' failure to give some clients sales charge waivers or special share classes when rolling over 529 plans from one state to another.

The three broker-dealers, Securities America Inc., Royal Alliance Associates Inc., and SagePoint Financial Inc., consented to the settlement without admitting to or denying Finra's findings. The period in which the firms fell short in their supervision of 529 rollovers was from September 2015 to September 2020, according to Finra. The Advisor Group broker-dealers were censured in the matter but paid no fines, with Finra crediting the firms for their cooperation.

An Advisor Group spokesperson declined to comment about the 529 matter.

529 plans are tax-advantaged securities that encourage saving for future educational expenses of a designated beneficiary, according to Finra. They are sponsored by states, state agencies or educational institutions. All 50 states and the District of Columbia sponsor at least one type of 529 plan.

According to Finra, the Advisor Group broker-dealers' written supervisory procedures didn't alert firm personnel of the potential availability of certain share class sales charge waivers or special share classes for 529 plan rollovers and the firms didn't offer training to financial advisors.

Instead, the broker-dealers relied upon financial advisors to determine whether sales charge waivers on the 529 plan rollovers were available, and to then complete the required forms to ensure that customers received those benefits, according Finra.

Securities America agreed to pay $123,000 in restitution to settle the matter with Finra, while Royal Alliance agreed to pay $235,000 and SagePoint Financial agreed to pay $157,000.

In December, four Advisor Group firms — FSC Securities Corp., Royal Alliance Associates, SagePoint Financial and Woodbury Financial Services Inc. — were penalized by Finra with close to $1.3 million in fines and restitution over sales of GPB Capital Holdings private placements.

‘IN the Nasdaq’ with Brett Hickey, founder and CEO of Star Mountain Capital

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.