Finra fines three former Cetera firms over sales

The Financial Industry Regulatory Authority has censured three former units of Cetera—Investors Capital Corp., J.P. Turner & Co. and VSR Financial Services—for selling Class A shares with a front-end load, or Class B or Class C shares to customers who were eligible for Class A shares without a load.

The firms agreed to pay restitution in the amounts of $437,674, $213,137 and $47,801, respectively.

Investors Capital Corp. was absorbed into Cetera Advisors in 2016. Cetera closed J.P. Turner in 2015, and in 2016 Cetera folded VSR into its Summit Brokerage Services.

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In its letters of acceptance, waiver and consent, Finra said that for several years the three firms charged certain retirement-plan and charitable-organization customers higher-priced versions of the same funds that the customers were eligible to buy at lower cost.

Finra said all three firms “failed to establish and maintain written procedures to identify applicable sales charge waivers in fund prospectuses for eligible customers.”

It also said the firms failed to adequately notify and train their financial advisers about the lower-cost funds, and failed to adopt adequate controls to detect instances in which their brokers did not provide sales charge waivers to eligible customers for their mutual fund purchases.

Related Topics: Financial Industry Regulatory Authority