FINRA censured and fined Coburn & Meredith, Inc. $75,000 for failing to apply sales charge discounts to eligible customer purchases of unit investment trusts ("UITs") from 2009-2014. FINRA additionally ordered Coburn to pay restitution of $203,097.47 to customers subjected to excessive sales charges as a result of Coburn & Meredith's failure to apply the discounts.
The report states that over the relevant period, Coburn failed to apply sales charge discounts to 856 UIT purchases that were eligible for discounts, resulting in the $203k overcharge spread amongst the Coburn customers. In plain terms, FINRA concluded that certain Coburn clients paid unnecessary sales fees they shouldn't have had to pay.
UIT sales fees may be reduced in a variety of ways, such as purchasing-in-bulk breakpoints or rollover and exchange discounts. FINRA issued a Unit Investment Trust Sales Notice to Members over a decade ago reminding broker-dealers that UIT transactions must take place "on the most advantageous terms available to the customer," and that firm and firm employees bear responsibility for identifying and applying price breaks, such as sales charge discounts.
Accordingly, the $75,000 fine and $203,097.47 restitution order is a result of Coburn's alleged failure to identify and apply sales charge discounts to eligible UIT purchases, pursuant to this Notice and related NASD/FINRA Conduct Rules.
If you have invested with Coburn & Meredith or with any firm, broker, or financial adviser whose failure to apply sales charge discounts to eligible UIT purchases or whose misconduct or lack of due diligence has resulted in excessive fees, penalties or other financial consequences that have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.