FINRA Sanctions Robert W. Baird & Co. for Overcharges
According to a Letter of Acceptance, Waiver and Consent, Robert W. Baird & Co. Inc. (CRD#: 8158/SEC#: 801-7571,8-497) and the Financial Industry Regulatory Authority Inc. (FINRA) have reached an agreement. As part of this settlement, Robert W. Baird will provide approximately $520,000 in restitution to affected clients due to the firm’s alleged failure over a six-year period. This failure pertained to the omission of certain sales charge waivers and fee rebates offered by mutual fund companies.
Robert W. Baird and Co., headquartered in Milwaukee, Wisconsin, has a network of over 3,500 financial advisors and registered representatives operating from 380 branch offices. The firm is dual registered as a broker dealer and investment advisor. According to its CRD, the firm has 73 disclosures on its broker record, including 42 regulatory actions and 31 arbitrations.
FINRA Targets Rights of Reinstatement
According to FINRA, the self-regulator of brokers and brokerage firms, mutual fund issuers generally extend various benefits to their shareholders, which may encompass a feature known as the “right of reinstatement.” This feature allows investors to buy shares of a fund even after selling shares of that same fund or another fund within the same fund family. Importantly, this can be done without incurring a front-end sales charge (typically associated with Class A shares) or to recoup all or part of a contingent deferred sales charge.
FINRA’s targeted examination conducted in 2020, specifically concerning the rights of reinstatement, led to the settlement.
According to FINRA, from January 2015 to March 2021, Baird’s supervisory system failed to provide certain clients with mutual fund sales charge waivers and fee rebates they were entitled to receive through the rights of reinstatement offered by mutual fund companies. This alleged lapse resulted in the violation of industry rules, affecting more than 2,300 customer accounts.
In accepting FINRA’s findings, Baird did not admit to or deny them, as stipulated in the settlement. The self-regulator acknowledged Baird’s “extraordinary cooperation” throughout the process. In response to the matter, FINRA censured Baird, but did not issue a fine.
In June 2019, FINRA censured and fined Robert W. Baird & Co. $150,000 for reportedly after it reportedly published seven research reports about an issuer without disclosing that the research analyst who authored the reports was engaged in employment discussions with the issuer that constituted an “actual, material conflict of interest.”
Failure to Supervise
FINRA Rule 3110, also known as the “Supervision” rule, is a regulatory rule established by FINRA to ensure that member firms in the securities industry have effective systems and procedures in place to supervise the activities of their associated persons (employees, representatives, and brokers). The rule outlines the responsibilities and requirements that member firms must adhere to regarding supervision, compliance, and risk management.
Securities Fraud Attorneys
If you are concerned about your investments with Robert W. Baird & Co., please call the White Law Group 1-888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.
Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.
With over 30 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions attempt to recover their investment losses. For more information, please visit our website, www.whitesecuritieslaw.com.
Tags: finra sanctions, Robert W. Baird & co. Last modified: November 8, 2023