US-based Financial Industry Regulatory Authority has fined 25 broker-dealers a total of $2.14m for failures related to their completion of the authority’s firm self-assessment of mutual fund breakpoint discount compliance.
The self-assessment required firms that sold front-end load mutual funds to review their compliance in providing breakpoint discounts to customers during 2001 and 2002 and report those results to the Financial Industry Regulatory Authority (FINRA) which was then National Association Of Securities Dealers (NASD).
Breakpoint discounts are volume discounts applicable to front-end sales charges on class A mutual fund shares. The self-assessment followed findings by NASD, the New York Stock Exchange and the Securities and Exchange Commission that nearly one in three mutual fund transactions that appeared eligible for a breakpoint discount did not receive one.
All 25 firms settled these matters without admitting or denying the findings but consented to the entry of FINRA’s findings.
Susan Merrill, FINRA’s executive vice president and chief of enforcement, said: FINRA is hindered in carrying out its regulatory mission when firms fail to adequately self-assess their conduct and report the results accurately and in a timely manner. Today’s settlements are a clear message that when firms are required to perform self-assessments, FINRA demands that they be diligent and fully compliant.
