Investors Capital Corporation (Investors Capital) of Lynnfield, Massachusetts, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly failing to apply sales-charge discounts to certain customers’ eligible purchases of unit investment trusts and for failing to establish, maintain, and enforce a proper supervisory system with respect to certain registered representatives’ unsuitable recommendations of unit investment trusts (UITs).
FINRA found that Investors Capital, through some of its registered representatives, recommended unsuitable short-term trading of UITs without reasonable grounds for believing the recommendations were suitable for customers, resulting in customer losses of approximately $242,892. FINRA also found that Investors Capital failed to apply sales charge discounts to approximately 1,995 customers’ purchases of UITs, resulting in excessive sales charges of $472,876. The firm’s supervisory system allegedly failed to ensure the customers received appropriate sales charge discounts, relying solely on its representatives to ensure customers received the discounts. Without admitting or denying FINRA’s findings, Investors Capital was censured, fined $250,000 and required to pay restitution of $841,532.97 to the affected customers. Continue reading →