FINRA ordered LPL, Raymond James and Wells Fargo to pay more than $30 million in restitution to clients for overcharging on mutual fund sales.
It was a mistake that the firms detected and reported to FINRA, but one which the regulator said was due to inadequate supervision and unreasonable reliance upon advisors to waive the sales charges.
The order applies to both the independent and employee sides of Raymond James and Wells Fargo.
Mutual funds sometimes waive their upfront sales charges on Class A shares for certain types of retirement accounts and charities. FINRA said that at various points since July 2009, Wells Fargo, Raymond James and LPL did not waive the charges for eligible clients.
Altogether, more than 50,000 accounts and charitable organizations unnecessarily paid the sales charges.
FINRA said that firms failed to adequately supervise the sale of mutual funds and "unreasonably relied on financial advisors to waive charges for retirement and eligible charitable organization accounts, without providing them with critical information and training."
Individually, Wells Fargo will pay affected clients $15 million while Raymond James will pay $8.7 million and LPL $6.3 million. The firms, which were not fined for the error, neither admitted nor denied the charges, but consented to FINRA's findings.
An LPL spokeswoman noted that "there are no fines associated with this agreement as a result of our ongoing efforts to ensure a proper resolution of this issue for investors."
"LPL has begun providing restitution to affected investors as well as implementing process changes to further protect investors for this issue in the future," the spokeswoman said in an email.
A Raymond James spokeswoman also noted her firm "proactively initiated client refunds," after discovering the mistake.
"Given the firm's extraordinary cooperation, FINRA waived any fines which would have otherwise been assessed. We are pleased to have the issue resolved," the spokeswoman said in an email.
This is not the first time that FINRA has sanctioned a firm for overcharging on mutual fund sales. A year ago, the regulator fined Merrill Lynch $8 million and ordered the wirehouse to pay $24.4 million in restitution to affected clients. That restitution came on the heels of $64.8 million that the firm had already paid to clients.
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