The Financial Industry Regulatory Authority has fined Oppenheimer & Co. for alleged supervisory failures involving early rollovers of unit investment trusts, FINRA announced Monday.
Pointing to the $3.87 million in restitution that FINRA ordered the firm to pay to customers who incurred potentially excessive sales charges because of those early rollovers, Jessica Hopper, senior vice president and acting head of FINRA’s Department of Enforcement, said in a statement that “providing restitution to investors remains a top priority for FINRA.”
FINRA member firms “must be mindful of costs to customers when recommending a product, particularly when recommending that customers make short-term sales of products that are intended as long-term investments,” she also said.
Oppenheimer declined to comment. However, without admitting or denying the findings, the firm on Dec. 17 signed a letter of acceptance, waiver and consent in which it agreed to provide that restitution to customers. Oppenheimer also agreed to pay a fine of $800,000 and a censure. FINRA accepted the letter Monday.
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From January 2011 through December 2015, Oppenheimer executed more than $6.4 billion in UIT transactions, and $753.9 million of them were early rollovers, according to FINRA.
FINRA, however, discovered that the firm’s written supervisory procedures and supervisory system, which did not involve the use of automated reports or alerts, “were not reasonably designed to supervise the suitability of those early rollovers,” FINRA said.