FINRA Fines American Portfolios Financial Services $1.6 Million for Supervisory Failures with Unit Investment Trusts
American Portfolios Financial Services has agreed to pay a $1.6 million fine to settle charges brought by FINRA, which alleges the firm failed to properly supervise its registered representatives in their recommendations of unit investment trusts (UITs). The violations occurred between October 2018 and October 2024, during which time American Portfolios' supervisory systems were not adequate for identifying red flags associated with UIT sales. According to FINRA, the firm's policies lacked specific guidance on assessing whether UIT recommendations were suitable for clients. The regulatory body highlighted that some representatives repeatedly advised clients to sell UITs before their maturity dates and reinvest in new ones, causing unnecessary fees. One pair of reps recommended early sales 61% of the time, while a third rep did so about 78%. These actions led to over $872,960 in costs for at least 139 clients. American Portfolios is part of Osaic (formerly Advisor Group), which merged its broker-dealers into one entity by October 2024. Osaic stated that the settlement relates only to actions prior to their integration and emphasized that current supervisory policies were not under investigation.
Topics: broker-dealer regulation compliance FINRA unit investment trusts (UIT)