Feltl & Company (Feltl) of Minneapolis, Minnesota submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement for the Financial Industry Regulatory Authority (FINRA) for allegedly failing to apply sales-charge discounts to certain customers’ eligible purchases of unit investment trusts (UITs) and for failing to establish, maintain, and enforce a proper supervisory system. Feltl has been registered with FINRA and the NASD since 1975 and has faced three similar FINRA disciplinary actions in the past.
UITs are generally issued by a firm representative that assembles the UIT’s portfolio of securities, deposits the securities in a trust, and sells units of the UIT in a public offering. UIT units are redeemable securities that are issued for a specific term, and entitle an investor to receive his or her proportionate share of the UIT’s net assets on redemption or at termination.
FINRA investigators alleged that Feltl, between May 1, 2009 and April 30, 2014, failed to identify and apply sales charge discounts to certain customers’ eligible purchases of UITs. FINRA found that Feltl failed to apply sales-charge discounts to more than 1,100 eligible UIT purchases resulting in customers paying excessive sales charges of approximately $261,873. Additionally, customers paid a combined total of nearly $65,000 in commissions and sustained additional losses on the unsuitable trades. FINRA alleged that the forgoing conduct shows that Feltl failed to establish, maintain, and enforce a supervisory system and written supervisory procedures reasonably designed to ensure that customers received sales-charge discounts to which they were entitled on UIT purchases.
The alleged conduct violates NASD Conduct Rules 3010(a) and (b) and FINRA Rule 2010. Without admitting or denying the FINRA allegations, Feltl agreed to the sanctions and was ordered to pay a $250,000 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 Feltl & Company, which have a duty to supervise employees in order to protect their customers’ interests.
Have you suffered losses in your Feltl & Company account for failing 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 Feltl & Company 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.