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Tampa Firm Fined $175,000 and Ordered to Pay Over $400,000 in Restitution for Supervisory Failures

INVEST Financial Corporation (IFC) of Tampa, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement for the Financial Industry Regulatory Authority (FINRA) for alleged supervisory failures in connection with Unit Investment Trust (UIT) transactions with its customers.

A UIT is generally a portfolio of redeemable securities (units) that can contain several different types of securities with a specified lifetime. The most common of these securities are stock and bond trusts. UITs are created with a definite life and are a fixed portfolio of securities. This makes UITs different from a mutual fund that allows its securities to be bought and sold in perpetuity.  Sales charge discounts are often offered to customers who periodically reinvest in a UIT which is also known as a rollover. The UIT sponsor can also offer “breakpoints” which distribute sales charge discounts depending on the amount invested.

In the case of IFC, FINRA found that from May 1, 2009 through April 30, 2014 IFC failed to apply certain sales charge discounts to eligible UIT customers and failed to establish, maintain and enforce a supervisory system reasonably designed to ensure that customers received sales charge discounts on all eligible UIT purchases. FINRA found that INVEST failed to apply sales charge discounts to 2,809 eligible customers resulting in customers paying excessive sales charges of approximately $398,401.30

INVEST, without admitting or denying the FINRA allegations agreed to the sanctions and was ordered to pay a restitution of $398,401.30 plus interest and ordered to pay a $175,000 fine.

FINRA rules require brokerage firms to establish and implement a reasonable supervisory system to protect customers from the risks associated with investing. The implementation of the rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for investment losses which stem from their employees’ misconduct. Therefore, investors who have suffered losses due to a brokerage firm’s failure to supervise the unsuitable recommendations of its representatives can bring forth claims to recover damages against firms, like INVEST Financial Corporation, which have a duty to supervise employees in order to protect their customers’ interests.

Have you suffered losses in your INVEST Financial Corporation account due unsuitable recommendations or your broker dealer’s failure to apply sales charge discounts? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against INVEST Financial Corporation stockbrokers who may have engaged in misconduct and caused investors losses.

The most important of investors’ rights is the right to be informed!  This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida.  For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues.  The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally!  Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.