The Financial Industry Regulatory Authority, or FINRA, has fined two Wachovia units more than $4.5 million for violations related to the sales of mutual funds and unit investment trusts.
Wachovia Securities was fined $4.41 million for its failure to provide investors with sales charge discounts in eligible Unit Investment Trusts (UIT) transactions. Wachovia Securities Financial Network was fined $150,500 for suitability violations related to improper Class B share sales. The fines reflect the $4 million-plus in additional commissions the firms received by selling Class B and C shares rather than Class A shares.
Wachovia has already returned over $2.4 million to Class A purchasers in connection with 4,200 Net Asset Value (NAV) transfer transactions and approximately $3 million to customers in connection with over 20,000 UIT transactions.
As part of the settlement, the firms will also provide remediation to 5,850 households that purchased Class B and C shares in over 14,500 transactions and to additional eligible NAV customers who did not receive the benefit of NAV transfer programmes.
Susan Merrill, executive vice president and chief of enforcement at FINRA, said: Firms must consider all relevant factors when recommending securities. The failure to provide available discounts or recommend a suitable share class wrongly increases costs to investors. We are pleased that through these settlements millions of dollars are being returned to customers.
