RBC to Pay $75K for Excessive Sales Charges

“The fiirm’s oversight of discounts available through rights of reinstatement relied on an automated alert that was set to identify transactions in which a customer liquidates a position in a fund family and then purchases back into the same family at a later date,” the order explains.

“Through at least December 2021, the alert parameters were set so that the alert would only trigger when the principal of the transaction was more than $1,000,” the order states.

“The parameters were also set so the alert would trigger only when a right of reinstatement window was for 100 days or less. Thus, the alert was not designed to, and did not, capture all transactions eligible for reinstatement privileges.”

For instance, “approximately 80% of trades missing a right of reinstatement benefit between January 2016 and December 2021 were trades where the alert did not trigger because the transaction was for less than $1,000 in principal, or involved a right of reinstatement entitlement window greater than 100 days,” FINRA said.

The firm also, at times, “failed to reasonably review alerts that did trigger to ensure that eligible customers were credited with reinstatement privileges,” according to the order.

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