Morgan Stanley to Return $1.7M in Excess 529 Plan Fees, Interest

FINRA's self-reporting 529 plan share class program included over $2.7 million in total restitution and interest paid to clients of some 3,900 accounts. They payments arose from settlements with Morgan Stanley and B. Riley Wealth Management, as well as from 17 matters resolved through cautionary action letters.

The news comes about a year Merrill Lynch and Raymond James paid a combined $12 million in restitution to clients due to excess 529 plan fees and their failure to supervise share-class recommendations for the plans. These matters were resolved before FINRA launched its 529 Plan Share Class Initiative, in which it encouraged member firms to voluntarily self-report potential violations.

Recent Cases

In settling the recent 529-fee matters, Morgan Stanley and B. Riley did not admit or deny the charges, though they consented to the entry of FINRA's findings. FINRA recognized the two firms for their cooperation and did not fine them.

"The purpose of the 529 initiative is to remedy potential supervisory and suitability violations related to 529 plan share-class recommendations, and to return money to harmed investors as quickly and efficiently as possible," said Jessica Hopper, head of FINRA's Department of Enforcement.

"We are very pleased with the substantial progress made thus far, are encouraged by the level of cooperation of member firms that self-reported, and expect to resolve the remaining matters in the coming year," Hopper added.

See: Merrill and Raymond James to Return $12M in Excess 529 Plan Fees