What You Need to Know
- As a result of supervisory failures, the firm failed to prevent several clients from being charged excessive, unnecessary fees, FINRA says.
- One of its brokers had engaged in unsuitable mutual fund and cross-product switches, according to FINRA.
- The firm agreed to pay a $200,000 fine and $63,347 in additional restitution to clients to settle the allegations.
NYLife Securities has agreed to pay a total of $263,347 to settle allegations that, as a result of supervisory failures, it failed to prevent several of its clients from being charged excessive, unnecessary fees after one of its brokers engaged in unsuitable mutual fund and cross-product switches, the Financial Industry Regulatory Authority said.
From January 2015 through March 2019, the firm “failed to establish, maintain and enforce a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rule 2111’s suitability requirements as it pertains to mutual fund and cross-product switches,” according to FINRA.
Without admitting or denying the industry self-regulator’s findings, NYLife Securities signed a FINRA letter of acceptance, waiver and consent on Sept. 30 in which it agreed to be censured and pay a $200,000 fine and restitution of $63,347. FINRA signed the letter on Monday.
NYLife Securities also agreed to review and update its Managing Partner Field Supervision Guide and the training module of managing partners and their delegates, relating to the firm’s mutual fund and cross-product switching supervision.
“Within no later than 120 days of the date of the notice of acceptance of the AWC, a senior officer and principal of NYLIFE Securities shall certify in writing to FINRA that the firm has updated the Guide and the training module to address unsuitable short-term trading of mutual funds and cross-product switching, with training to commence after the 120 day period,” according to the AWC letter.
The firm has “always acted in good faith and remain fully committed to providing the right tools and guidance to meet financial needs,” Kevin B. Maher, a spokesperson for parent company New York Life, told ThinkAdvisor by email on Tuesday. “We were able to work with FINRA to find a resolution that best serves our clients’ interests,” he added.
‘Broker A’ Cashed In
“On hundreds of occasions” between January 2015 and March 2019, a broker at the firm, identified only as “Broker A,” recommended that 10 clients buy and sell Class A mutual funds after holding the shares for short periods of time, according to the AWC letter.