The Financial Industry Regulatory Authority has fined Oppenheimer & Co. $1 million for intentionally submitting inaccurate mutual fund breakpoint data and for failing to properly supervise its brokers.
FINRA also required Oppenheimer to hire an independent consultant to evaluate its policies, systems and procedures for responding to information requests from regulators.
“The self-regulatory model depends on accurate, timely and complete responses by firms to informational requests from FINRA,” said Susan Merrill, executive vice president and chief of enforcement at FINRA. “This settlement sends a clear message to broker/dealers that they must have sound programs that insure conscientious responses to regulatory requests, as well as reasonable safeguards when responsibility is delegated.”
As part of its review of 2,000 B/Ds that sold front-end load mutual funds in 2001 and 2002, FINRA, then called NASD, asked Oppenheimer for breakpoint data in 2003. On two occasions following, in June and November, Oppenheimer submitted inaccurate and incomplete data, and failed to follow up to correct the data. When NASD received the first set of information and told the company that the information was “pervasively flawed” and “rife with errors,” NASD asked it to resubmit the information.
The submission in November was again flawed, NASD said, in that it failed to include proper discount information or link accounts. Thus, many of the trades that Oppenheimer processed overcharged investors.
Oppenheimer settled the matter without admitting or denying the charges, but consented to the entry of FINRA’s findings and dismissal of charges against Oppenheimer CEO Albert Grinsfelder Lowenthal.