PNC Investments LLC (PNC) of Pittsburgh, Pennsylvania submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly disadvantaging customers in sales of mutual fund shares. PNC has been a FINRA member since December 2003 and has over 1,982 branch offices throughout the U.S.
FINRA found that from at least July 1, 2009, PNC disadvantaged certain retirement plan customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. There are typically three classes of mutual fund shares: A, B, and C; all with different sales charges, management fees and other terms and conditions. Class A shares generally have the highest initial sales charge and Class B and C shares typically do not carry a front-end sales charge but have significantly higher distribution and service fees and may be subject to a contingent deferred sales charge.
In November 2015, PNC self-reported to FINRA that certain customers had not received available sales charge waivers. According to PNC, over 121 accounts were affected, with clients being overcharged approximately $191,740 for mutual fund purchases made since July 1, 2009. FINRA found that PNCI failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales and failed to adequately notify and train its financial advisors regarding the availability of mutual fund sales charge waivers for eligible customers.
FINRA found that PNCI violated NASD Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010 for its misconduct. In a settlement, without admitting or denying the FINRA sanctions, PNCI agreed to the sanctions and was ordered to pay restitution plus interest to all affected customers estimated at $224,750.
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 PNC Investments, which have a duty to supervise employees in order to protect their customers’ interests.
Have you suffered losses in your PNC Investments account due to unsuitable recommendations or unnecessary sales charges in your investment account? 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 PNC Investments 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 email@example.com for answers to any of your questions about this blog post and/or any related matter.