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Finra Suspends, Fines Ex-Stifel Rep Over Early UIT Rollovers

By Alex Padalka November 24, 2020

Finra says it has suspended and fined a former Stifel, Nicolaus & Co. broker over early rollovers of unit investment trusts in customer accounts.

From July 2013 through December 2016, Kurt Jason Gunter allegedly recommended that his clients roll over UITs more than 100 days before they matured on at least 270 occasions, Finra says in a letter of acceptance, waiver and consent published last week.

UITs offer investors shares in a fixed portfolio of securities through a one-time public offering and typically terminate after 15 or 24 months, Finra says. The product also comes with a variety of upfront sales charges, so a rep who recommends selling them before maturity and buying new UITs with the sale proceeds can cause the customer to pay more sales charges than they would if they just kept the original UIT, the industry’s self-regulator says, adding that “short-term trading of UITs may be improper.”

Finra also says Gunter signed 96 UIT switch letters, which went out to customers with inaccurate or missing information about the costs of the early rollovers that, on average, understated the sales charges by around $2,500.

Last week, Gunter agreed to a three-month suspension and to pay a $10,000 fine without admitting or denying the findings, Finra says.

Gunter has been in the industry since 1996 and was registered with Stifel from June 2013 to August 2017, according to his BrokerCheck profile. Since then, he’s been registered with Wells Fargo.

Finra has been aggressively pursuing alleged violations involving UITs in recent months. In May, Stifel itself settled with the industry’s self-regulator for $3.6 million to settle allegations that it failed to properly supervise the suitability of its reps’ recommendations of early rollovers of UITs, as reported.

In June, the industry’s self-regulator ordered Advisor Group broker-dealer SagePoint Financial to pay around $1.6 million, as reported.

Finra also reached a $4.6 million settlement with Oppenheimer & Co. in December 2019 for their handling of early rollovers of UITs, as reported.

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Tags:  Regulatory/legal issues , Investment strategies , Wells Fargo , Stifel, Nicolaus & Co. , Advisor Group

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