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FINRA fines UBS $250,000 for Overcharging Mutual-fund Customers

According to the Financial Industry Regulatory Authority (FINRA) a unit of UBS Group AG will pay a $250,000 fine to settle charges that it allegedly failed to waive certain fees for about 2700 eligible mutual-fund customers. 

Mutual funds generally require that investors who purchase Class A shares pay a frontend sales charge. Many mutual funds waive the front-end sales charge if the mutual fund is purchased pursuant to a right of reinstatement, which allows customers who have previously sold Class A shares to repurchase those shares at NAV without paying a frontend sales charge provided certain conditions are met. Typically, the customer must reinvest the proceeds from an earlier redemption of a Class A mutual fund in the same fund or fund family within a period specified in the prospectus, usually within 90 to 180 days.

If these conditions are satisfied, the mutual fund waives the front-end sales charge. During the Relevant Period, UBS allegedly failed to provide approximately 2,700 customers with sales charge waivers to which they were entitled pursuant to rights of reinstatement. As a result, these customers paid $277,636 in excess sales charges. According to the settlement notice, UBS has reimbursed them all.

In concluding the settlement, UBS, neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

The foregoing information, which is publicly available on FINRA’s website, is being provided by The White Law Group.  The White Law Group is a national securities fraud, securities arbitration and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit https://whitesecuritieslaw.com.

Tags: , , , Last modified: March 31, 2017