The Financial Industry Regulatory Authority (FINRA) has censured a financial services firm for selling certain retirement plan customers inappropriate share classes.
Specifically, according to a letter of acceptance, waiver and consent, between Jan. 1, 2009, and May 26, 2016, Voya Financial Advisors “disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge, but were instead sold Class A shares with a front-end sales charge or Class B or C shares with back-end sales charges and higher ongoing fees and expenses.”
FINRA noted that Voya failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales, instead relying on its financial advisors to determine the applicability of sales charge waivers, “but failed to maintain adequate written policies or procedures to assist financial advisors in making this determination.” FINRA noted that Voya failed to:
- establish and maintain reasonable written procedures to identify applicable sales charge waivers in fund prospectuses for Eligible Customers;
- adequately notify and train its financial advisors regarding the availability of mutual fund sales charge waivers for Eligible Customers; and
- adopt adequate controls to detect instances in which the Firm did not provide sales charge waivers.
However, FINRA recognized “the extraordinary cooperation of Voya for having initiated on its own, and prior to detection or intervention by a regulator, the investigation into the matter,” voluntarily expanded the lookback period on the violations at FINRA’s request for an additional two years (and approximately $125,982 in additional customer restitution), promptly reported to FINRA, established a plan of remediation, promptly took action and remedial steps, and “employed subsequent corrective measures, prior to detection or intervention by a regulator, to revise its procedures to avoid recurrence of the misconduct.”
The customers that were affected will receive restitution, plus interest, from the date of purchase through the payment date.
