According to the Financial Industry Regulatory Authority (FINRA), Advisor Group’s SagePoint Financial will pay over $1.6 million in fines and restitution in connection with premature rollovers of unit investment trusts (UITs). Financial advisors in the U.S., including Pennsylvania, are subject to the rules and regulations issued by FINRA. Failure to adhere to these rules can result in fines and other penalties.
The CEO of SagePoint signed a letter of acceptance, waiver, and consent on June 1. The letter did not contain an admission or a denial of FINRA’s claim. However, the company did agree to pay restitution of $1.32 million as well as a $300,000 fine and to be censured.
During the period from January 2013 through December 2017, SagePoint generated over $1.72 million in sales charges connected with more than $895 million in UIT transactions. These transactions included $203.7 million in revenue from sales of UITs that were over 100 days ahead of their maturity dates. Some or all of these proceeds were used to purchase a new series of the same UIT, according to FINRA. According to FINRA, around $65.8 million of the revenue was from transactions in which customers sold UITs more than 100 days before their maturity dates and then used the revenue to buy a subsequent series of the same UIT. According to the regulator, SagePoint did not establish and maintain written supervisory procedures and systems to effectively monitor the suitability of agents’ recommendations to customers regarding early rollovers of UITs.
Financial representatives and firms can work with a qualified attorney to ensure that they are compliant with FINRA requirements. If a firm or representative is charged with non-compliance by FINRA, an attorney with experience in finance may be able to help resolve the matter.