The Financial Industry Regulatory on Friday ordered Edward Jones, Osaic Wealth and Cambridge Investment Research to pay more than $8.2 million in restitution to clients harmed by the firms’ failures to provide available mutual fund sales charge waivers and fee rebates on mutual fund purchases.
"Each of the three firms failed to establish and maintain a supervisory system reasonably designed to supervise whether eligible customers received available mutual fund sales charge waivers and fee rebates through rights of reinstatement," according to FINRA.
As FINRA explained, "many mutual fund issuers offer a right of reinstatement, which allows investors to reinvest in shares of a fund or fund family after previously selling shares without incurring a front-end sales charge, or to recoup all or part of a contingent deferred sales charge."
As a result, clients did not receive the rights of reinstatement benefits to which they were entitled, totaling over $8.2 million.
As a result of the failures:
- Edward Jones customers paid $4,440,979 in excess sales charges and fees from January 2015 to June 2020;
- Osaic Wealth clients (and those of its affiliated broker-dealers) paid $3,096,490 in excess sales charges and fees from January 2017 to August 2020; and
- Cambridge Investment Research customers paid $699,217 in excess sales charges and fees from January 2015 to March 2022.
Without admitting or denying the charges, each firm agreed to repay affected clients, including interest.
FINRA did not impose any fines in connection with the matters in recognition of each firm’s extraordinary cooperation with FINRA’s investigations, the broker-dealer self-regulator said in a statement.
