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Oppenheimer, Already Sanctioned $3.8 Million, Sees Broker Penalized for Premature & Unsuitable UIT Sales & Trades

In January 2020, FINRA ordered Oppenheimer & Co. to pay $3.8 million in restitution and fines for failing to supervise early unit investment trust (UIT) rollovers. Half a year later, FINRA continued its enforcement by identifying and sanctioning Oppenheimer brokers implicated in the premature and excessive UIT trading sales practice, exacerbated by the firm's alleged failure to supervise its personnel, and resulting in costly sales charges and other fees absorbed by customers caught in the middle.

FINRA unraveled one such case of premature UIT trades and suspended Oppenheimer broker Frederick Levine after he purportedly recommended nearly 1,000 early rollovers of UITs before jumping ship to RBC Wealth Management.

According to FINRA, Levine's recommendations were unsuitable for his investors and caused customers to incur unnecessary sales charges, a familiar pattern seen throughout the industry and catching FINRA's attention over the course of multiple years.

In 2016, FINRA conducted a targeted inquiry on industry-wide UIT rollover transactions that may have been excessive, unsuitable, and/or premature—an ongoing probe resulting in multimillion dollar fines for firms, and suspensions/expulsions for brokers abusing UIT transactions through unsuitable recommendations, such as premature sales resulting in needless sales charges and penalty fees for selling prior to maturity.

For instance, ex-Morgan Stanley and LPL Financial broker Ron Ray Willoughby (having since joined Kestra Investment Services in Venice, California) received a fine and suspension for engaging in an unsuitable pattern of UIT rollovers, resulting in sales charges and fees when customers rolled over their UITs more than 100 days prior to maturity.

FINRA also sanctioned Morgan Stanley itself for UIT supervisory failures, ordering the firm to pay over $13 million in fines and restitution for failing to supervise representatives' short-term trades of UITs, affecting more than $5.2 billion of UIT transactions.

If you invested with any broker or financial adviser at Oppenheimer & Co, Morgan Stanley, or another FINRA firm who unsuitably recommended you rollover a unit investment trust (UIT) or similar long-term investment product prior to its maturity date, thus causing you to incur costly sales charges, fees, or other damages, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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