FINRA continued its campaign against unsuitable short-term sales of unit investment trusts (UITs) by fining former Stifel Nicolaus & Company broker Kurt Jason Gunter for recommending more than 270 early rollovers of UIT products in order to generate commissions over three years. Gunter is currently registered with Wells Fargo Clearing Services as both a broker and investment adviser.
Stifel, Nicolas & Company in May 2020 agreed to pay $3.6 million over allegations of unsuitable UIT sales and premature UIT rollovers that resulted in nearly $2 million in overcharges for harmed customers.
At the time, FINRA noted that Stifel's supervisory deficiency prevented the firm from detecting the unsuitable UIT rollovers, which resulted in many customers incurring sales charges they would have not have encountered had they simply held their UITs until maturity.
Investigators also found that Stifel sent 600 letters to customers that contained inaccurate information or omissions about costs and fees about UIT switches and rollover transactions, underestimating costs by approximately 50%.
Earlier in 2020, FINRA also ordered Oppenheimer & Co to pay $3.8 million for its failure to supervise early UIT rollovers. Prior to that, in 2017, Morgan Stanley paid $13 million for UIT sales violations, while in 2019, the Securities and Exchange Commission ordered Raymond James to pay $15 million for improperly charging advisory fees and excess commissions for UIT investments.
These orders and penalties follow FINRA's September 2016 targeted exam letter in which the regulator announced an industry-wide inquiry with respect to UIT rollovers, specifically related to written supervisory procedures and early rollovers 100 days or more prior to the portfolio ending date.
If you have invested with Stifel Nicolaus & Company, Oppenheimer, or with any broker, investment adviser, or brokerage firm that unsuitably recommended you rollover, switch, or otherwise sell a unit investment trust (UIT) prior to the UIT's maturity date, resulting in losses or fees/charges that have proven harmful to your investments or interests, 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.