What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: July 6, 2015

The Financial Industry Regulatory Authority (FINRA) ordered Wells Fargo, Wells Fargo Advisors Financial, Raymond James & Associates, Raymond James Financial Services and LPL Financial to pay more than $30 million plus interest to customers of certain charitable organization and retirement plan accounts. The companies are accused of failing to waive mutual fund sales charges for the charities and retirement accounts. Wells Fargo is to pay $15 million, Raymond James will pay $8.7 million, and LPL will pay $6.3 million. Raymond James will also pay restitution to customers who purchased or repurchased mutual funds without an appropriate sales charge waiver from January 1, 2015 through the date the firm fully begins training for systems having to do with the waivers.

According to a Wells Fargo Letter of Acceptance, Waiver and Consent (AWC) with FINRA, as well as a recent FINRA press release, some retirement plan and charitable organization customers were charged a front-end sales charge, when they should not have been, in Class A shares of certain mutual funds. On some occasions, they were also sold Class B or C shares and charged back-end sales charges with higher fees and expenses. Class A shares typically charge a front-end charge when purchased, and also have annual fund expenses of .25%. Most of this front-end charge is paid to the broker-dealer. Class B and C shares typically do not charge a front-end fee but have higher service fees and annual expenses of 1%. In Wells Fargo’s, LPL and Raymond James’ charitable organization and retirement plan mutual fund customer case, the Class A up-front fees were to be waived. Wells Fargo, Raymond James and LPL Financial did not waive these fees, thereby violating FINRA rule. Wells Fargo also allegedly did not apply the waivers to Class A mutual fund purchases, and did charge them front-end sales charges. They also charged higher ongoing fees and expenses for Class B and C mutual funds. More than 50,000 retirement accounts and charitable organizations were affected by the egregious fees and charges when purchasing Class A shares of the mutual funds, or when purchasing Class B or C shares that subjected them to unnecessary higher fees.

If you would like to sue Wells Fargo, Raymond James or LPL Financial for failure to supervise, please call our Chicago-based securities law office at 312-332-4200 to speak to an attorney. We sue firms such as these in the FINRA arbitration forum and can help you recover your investment losses.


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