The Financial Industry Regulatory Authority said Monday that it has reached settlements with six broker-dealers and obtained more than $16.8 million in restitution to approximately 10,000 investors for the firms' failures to reasonably supervise early rollovers of unit investment trusts, or UITs. The firms agreed to pay $6.6 million in fines.
The settlements in the sweep, which began in 2019, include two reached Monday with Wells Fargo Advisors Financial Network and Wells Fargo Clearing Services.
Wells Fargo Advisors Financial Network was censured and assessed a $100,000 fine; Wells Fargo Clearing Services was censured and ordered to pay a $550,000 fine and $2.083 million in restitution.
The early rollovers of UITs caused customers to incur potentially excessive sales charges, FINRA reported.
A UIT is a form of investment company that offers investors shares, or "units," in a fixed portfolio of securities in a one-time public offering that terminates on a specified maturity date, often after 15 or 24 months.
"UITs are generally intended as long-term investments and have sales charges based on their long-term nature, including deferred sales charges, and a creation and development fee," FINRA explained.
