Hightower Securities, the brokerage arm of the eponymous RIA acquisition firm, said in a recent Securities and Exchange Commission filing that it could wind up repaying clients as much as $1.2 million for charges related to the sale of the college savings plans known as 529 plans.
The firm said the $1.2 million figure was "estimated remediation," according to its annual audited financial statement known as a Focus report for 2019. Although Hightower filed the report at the start of March it did not become publicly available until recently on the SEC's website.
Because the figure is only an estimate, which firms make in such preliminary filings, the actual amount of remediation could wind up being less.
In January 2019, the Financial Industry Regulatory Authority Inc. told the brokerage industry it was launching a 529 Plan Share Class Initiative. Finra recommended that firms fix potential supervisory and suitability violations relating to advisers making trades for customers of 529 plans that were inconsistent with the accounts' investment objectives.
The regulator was essentially tasking broker-dealers with identifying problems with their sales of high-fee 529 college savings accounts.
Hightower Securities "has been working with Finra to remediate the matter," according to the filing.
The $1.2 million figure Hightower initially set aside should be viewed as a "placeholder," the company said in a statement. It was "based on preliminary assessments that have since been materially revised and recalculated with the help of an approved industry consultant and are currently being reviewed with the regulators," according to the company's statement.
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