The Financial Industry Regulatory Authority disclosed disciplinary actions taken against First Kentucky Securities Corp., Credit Suisse Securities (USA) LLC and Portfolio Resources Group Inc. for violations of certain rules and regulations.
The regulator on March 5 censured and slapped First Kentucky Securities with a $50,000 fine over findings that it 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. Those customers 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. The regulator alleged that the sales disadvantaged eligible customers by causing them to pay higher fees than they were actually required to pay.
FINRA found that First Kentucky Securities failed to reasonably supervise the application of sales-charge waivers to eligible mutual fund sales. The company was required to provide FINRA with a plan to remediate eligible customers who qualified for and did not receive the applicable mutual fund sales-charge waiver. The company also agreed to pay $58,153 in restitution to eligible customers.
On March 9, Credit Suisse Securities was fined $200,000 over its alleged failure to report over-the-counter options positions to the large options positions reporting system. Of the $200,000 fine, $75,000 is payable to FINRA.
On March 12, FINRA also censured and fined Credit Suisse Securities $250,000 on findings that the company caused its books and records, including its general ledger, to be inaccurate by improperly reclassifying certain breaks relating to foreign exchange transactions in its bank accounts held at external banks that remained unresolved at month-end as foreign exchange fails payable/receivable.
Portfolio Resources Group was fined $100,000 on March 28 over its alleged failure to develop and implement an anti-money laundering compliance program reasonably designed to detect and cause the reporting of suspicious transactions. The company was required to adopt and implement supervisory systems and written procedures reasonably designed to achieve compliance with the requirements of FINRA Rule 3310.
The companies did not admit or deny the findings.