Finra fines Merrill Lynch, UBS over closed-end funds
The Financial Industry Regulatory Authority, or Finra an industry-sponsored group that oversees stock brokers, is fining Merril Lynch, Pierce, Fenner & Smith Inc. and UBS Financial Services Inc. for inappropriately selling of a type of fund.
The Financial Industry Regulatory Authority, or Finra an industry-sponsored group that oversees stock brokers, is fining Merril Lynch, Pierce, Fenner & Smith Inc. and UBS Financial Services Inc. for inappropriately selling of a type of fund.
Finra, formed two years ago through a consolidation of the National Association of Securities Dealers and portions of New York Stock Exchange’s regulatory arm, is fining Merril Lynch $150,000 and UBS $100,000.
The two companies had supervisory failures that led to unsuitable short-term sales of closed-end funds, purchased at the funds’ initial public offerings.
Finra also suspended five Merrill Lynch brokers each for 15 days and fined them $10,000 for making unsuitable closed-end fund recommendations to customers.
“Closed-end funds possess complex features that can give rise to unsuitability for short-term investors, particularly when purchased at the initial public offering,” said Susan Merrill, Finra chief of enforcement.
Closed-end funds are investment companies that sell a fixed number of shares in an initial public offering, subject to built-in sales charges. After the offering, the shares trade in the secondary market, typically at a discount from the initial offering price.
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