According to a cnbc.com report on Tuesday, the Financial Industry Regulatory Authority (FINRA) has been cracking down on firms related to their sales of unit investment trusts (UITs). UIT Sales What This Means For Investors UITs are investments in a fixed portfolio of income-producing securities that have a defined maturity date, designed to provide capital appreciation and/or dividend income. FINRA found that Woodbury Financial Services, a brokerage firm in Oakdale, Minnesota, failed to identify and apply sales charge discounts to certain customers’ eligible purchases of UITs. The result was customers paying excess sales charges of $98,937. Woodbury is part of AIG Advisor Group, which is currently being sold by American International Group to Lightyear Capital and PSP Investments as of last month.
Another firm, ProEquities, a brokerage firm in Birmingham, Alabama, owned by Protective Life, was disciplined for similar UIT violations. FINRA claimed that ProEquities “lacked written supervisory procedures to identify UIT transactions eligible for sales charge discounts and lacked a process to assure that such discounts were properly applied. This resulted in excess charges to clients of $109,709. For this, the company was censured and fined $165,000 and ordered to pay $109,709 in restitution to its customers.