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The
cases now under investigation by FINRA are similar to one
brought last year against Bank of America’s Merrill Lynch unit,
which resulted in the firm paying an $8 million fine.
FINRA's review involves overcharges paid by charities and
retirement accounts that invested in funds sold by brokerages,
said Bradley Bennett, FINRA’s enforcement chief, at an event for
compliance professionals in New York.
"I think you'll see some activity on that front," Bennett said.
The Merrill Lynch case prompted some firms to review their
practices to see whether they, like Merrill, had failed to
provide the sales charge discounts that mutual fund issuers had
made available to retirement accounts and charities, Bennett
told Reuters.
Those firms self-reported their concerns to FINRA. The firms
would have to reimburse any unpaid discounts to customers,
Bennett said.
Bennett did not identify the firms that self-reported their
lapses or comment on the timing of future enforcement cases.
In the Merrill case, the firm had to reimburse customers $24.4
million, in addition to $64.8 million it had already repaid,
making the total payout about $97.2 million including the fine.
Like many rivals, Merrill has offered mutual fund shares in
multiple classes. Typically, Class A shares carry lower fees
than Class B and C shares, but carry upfront sales charges.
FINRA had said Merrill failed to provide promised sales charge
waivers on many retirement accounts for more than five years
beginning in January 2006, relying instead on financial advisers
it did not properly supervise to do so.
(Reporting by Suzanne Barlyn; Additional reporting by Jonathan
Stempel; Editing by Phil Berlowitz)
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