The Financial Industry Regulatory Authority has ordered Oppenheimer & Co. Inc. to pay over $3.8 million to customers who incurred potentially excessive sales charges due to early rollovers of unit investment trusts.
FINRA also fined the company $800,000 for failing to reasonably supervise early unit investment trust, or UIT, rollovers.
UITs are investment outfits that offer investors shares, or units, in a fixed portfolio of securities in a one-time public offering that terminates on a certain date, usually after 15 or 24 months. In a news release, FINRA said a representative who recommends a customer sell his or her UIT position before the maturity date and then rolls over those funds into a new UIT causes the customer to incur higher sale charges over time, which raises concerns about whether the investment is suitable for the client.
The regulator said Oppenheimer & Co. executed over $6.4 billion in UIT transactions from January 2011 through December 2015, of which $753.9 million were early rollovers. The firm's customers may have incurred more than $3.8 million in sales fees they would not have paid if they had held the UITs to maturity, FINRA said.
Oppenheimer neither admitted to nor denied the charges, but consented to the entry of FINRA's findings.