Stephens, Inc. submitted a letter of Acceptance, Waiver, and Consent to FINRA for failing to apply sales charge discounts to certain customers’ eligible purchases of unit investment trusts (“UITs”) between June 1, 2010 and May 31, 2015 in violation of FINRA’s rules. Stephens alse failed to establish, maintain, and enforce a supervisory system and written supervisory procedures reasonably designed to ensure that customers received sales charge discounts on all eligible UIT purchases in violation of both NASD and FINRA rules.
On March 31, 2004, FINRA issued Notice to Members 04-26, Unit Investment Trust Sales, which reminded broker-dealers that they should develop and implement procedures to ensure customers receive available sales charge discounts for UITs. The Notice further stated that UIT transactions must take place “on the most advantageous terms available to the customer” and that it is the firm’s responsibility to “take appropriate steps to ensure that they and their employees understand, inform customers about, and apply correctly any applicable price breaks available to customers in connection with UITs.”
During the Relevant Period, Stephens failed to identify and apply sales charge discounts to certain customers’ eligible purchases of UITs. Specifically, Stephens failed to apply sales charge discounts to 826 eligible UIT purchases resulting in customers paying excessive sales charges of approximately $458,747.
Also during the Relevant Period, Stephens failed to establish, maintain and enforce a supervisory system and written supervisory procedures reasonably designed to ensure customers received sales charge discounts on all eligible UIT purchases. The firm relied primarily on its registered representatives to ensure that customers received appropriate UIT sales charge discounts despite the fact that the Firm did not effectively inform and train representatives and their supervisors to identify and apply such sales charge discounts.
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