Maddox Hargett & Caruso, P.C., based in Indianapolis, is looking into financial advisors who transfer clients into more expensive investments, resulting in excessive costs. Commission-based financial advisors and brokers frequently make “exchanges” that convert clients from one investment to another that is remarkably similar. They frequently claim that these new investments would “earn you more money,” but the truth is that they will make more money in commissions and fees.
According to FINRA, the federal securities regulator, NY Life Securities has agreed to “pay a total of $263,347 to settle allegations that, as a result of supervisory failures, it failed to prevent several of its clients from being charged excessive, unnecessary fees after one of its brokers engaged in unsuitable mutual fund and cross-product switches.”
According to FINRA, a broker at the company, identified only as “Broker A,” recommended that 10 clients buy and sell Class A mutual funds after holding the shares for brief periods of time “on hundreds of times” between January 2015 and March 2019.
According to FINRA, the clients paid nearly $175,000 in unnecessary front-end sales charges for Class A mutual fund shares as a result of the short-term trades, with Broker A collecting around $116,000 in commissions.
A spokesman for parent business New York Life told ThinkAdvisor, “The firm has always behaved in good faith and remains completely dedicated to delivering the necessary tools and guidance to meet financial requirements.” He went on to say, “We were able to engage with FINRA to achieve a settlement that best serves our clients’ interests.” NYLife Securities signed a FINRA letter of acceptance, waiver, and consent on Sept. 30, 2021, without admitting or denying the industry self-findings, regulator’s agreeing to be censured and pay a $200,000 fine and $63,347 in restitution.
Broker-advisors don’t always inform clients that seemingly innocuous trades would result in a bonanza in commissions and fees for them and their firms. Frequently, shifting client money from one mutual fund share class to another is all that is required.
Who is responsible if a broker-advisor charges you excessive and needless fees, reducing your total returns? Brokerage firms are accountable for overseeing their brokers’ behavior under FINRA guidelines, which might lead to an arbitration dispute. Such transactions may be deemed “unsuitable” for a customer, particularly if they are uninformed of the financial consequences in terms of lowered retirement funds.
Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at firstname.lastname@example.org.