Robert W. Baird & Co. Inc. (Baird) of Milwaukee, Wisconsin submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly taking advantage of certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. Baird has been a FINRA member since 1971 and has over 140 branch offices throughout the U.S.
In May 2015, Baird self-reported to FINRA that many eligible customers had not received available sales charge waivers. Baird estimated that since July 1, 2009, approximately 1,400 accounts purchased mutual fund shares for which an available sales charge waiver was not applied. Baird estimated that clients were overcharged approximately $1.8 million since July 2009 due to its supervisory failures.
FINRA found that instead of waiving front-end sales charges to eligible customers, Baird sold Class A shares with a front-end sales charge or Class B or C shares with higher ongoing fees. This conduct disadvantaged customers by causing them to pay higher fees than they were actually required to pay. FINRA further alleged that the firm failed to adequately supervise and train its representatives regarding mutual fund sales charge waivers. As a result, Baird violated NASD Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010.
Without admitting or denying the FINRA allegations, Baird agreed to the sanctions and was ordered to pay restitution plus interest to effected customers estimated at $2.1 million.
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 Robert W. Baird & Co., which have a duty to supervise employees in order to protect their customers’ interests.
Have you suffered losses in your Robert W. Baird & Co. account due unsuitable recommendations or trades 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 Robert W. Baird & Co. 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 firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.