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.
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