Finra says it ordered Advisor Group broker-dealer SagePoint Financial to pay around $1.6 million over the sale of unit investment trusts.
From January 2013 through December 2017, the company allegedly failed to have in place an adequate supervisory system as well as written supervisory procedures that would properly supervise the suitability of its representatives’ recommendations of early rollovers of UITs, according to a letter of acceptance, waiver and consent published by the industry’s self-regulator.
UITs typically terminate after 15 or 24 months and come with various upfront sales charges, so selling them before maturity and buying new UITs with the proceeds can cause the customer to pay more sales charges than they would have had they just held on to the original, Finra says.
During the period in question, SagePoint executed more than $895 million in UIT transactions, generating more than $17.2 million in sales charges, according to the letter of acceptance. Finra also says that the firm’s representatives recommended potentially unsuitable early rollovers that caused customers to pay more than $1.3 million in sales charges they would not have incurred if they'd held their UITs to maturity.
SagePoint consented to pay a $300,000 fine as well as restitution of around $1.3 million, plus interest, to customers, according to the letter of acceptance.
SagePoint is one of the four broker-dealers — along with FSC Securities Corporation, Royal Alliance Associates and Woodbury Financial — that Advisor Group had on its network before it acquired Ladenburg Thalmann Financial Services in February, and that remain standalone companies.
The industry’s self-regulator has been zeroing in on alleged UIT violations: last month, Finra ordered Stifel, Nicolaus & Co. to pay more than $3.6 million in fines and restitution to clients over the firm’s alleged failures in its handling of early rollovers. Finra also ordered Oppenheimer & Co. to pay more than $4.6 million, including $3.8 million in restitution, for its handling of early rollovers, in December.
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