Western International Securities in Pasadena, California 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 eligible customers who purchased mutual fund shares received the benefit of applicable sales charge waivers. As a result, Western International Securities violated NASD Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010.
Since November 1995, Western International Securities (Western) has been a member firm of FINRA and holds 177 branch offices. According to the FINRA findings, Western had certain customers who were eligible for waiver of the initial sales charge associated with Class A shares. Instead, Western 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 40 of Western’s customers purchased mutual fund shares for which the waiver was not applied and were overcharged by approximately $305,000. In addition to the FINRA findings, Western allegedly failed to notify, train, and assist its financial advisors regarding the mutual fund sales charge waivers. Continue Reading