Park Avenue Securities Censured for Engaging in Multiclass Mutual Fund Abuse
Park Avenue Securities in New York, New York, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which the firm was censured for allegedly engaging in multiclass mutual fund abuse and failed to establish and maintain a supervisory system and written supervisory procedures reasonably designed to ensure that customers who purchased mutual fund shares received the benefit of applicable sales charge waivers. As a result, Park Avenue violated NASD Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010. Since 1999, Park Avenue Securities (Park Avenue) has been a member firm of FINRA with 45 branch offices. According to the FINRA findings, Park Avenue had certain investors that were eligible for waiver of the initial sales charge associated with Class A shares. Instead, Park Avenue sold them Class A shares with a front-end sales charge or Class B or C shares with back-end sales charges and higher ongoing fees and expenses. The FINRA findings stated that 264 of Park Avenue’s customers who purchased mutual fund shares were overcharged by approximately $560,170. The findings also stated that Park Avenue allegedly failed to notify, train, and assist its financial advisors regarding the mutual fund sales charge waivers. In addition, Park Avenue determined that they had failed to provide these charge waivers after FINRA sent a targeted examination letter for them to review its applicable sales as part of a Mutual Fund Fee Waiver Sweep.
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