Broker-Dealer Fined for Overstating Projected Returns on Customer Account Statements

A broker-dealer settled FINRA charges for overstating the projected yield and annual income for nine money market funds on customer account statements.

In a Letter of Acceptance, Waiver, and Consent, FINRA found that the broker-dealer overstated the projected yield and annual income for 8.5 million customers as a result of various technical issues, including a data feed that failed to overwrite old data. FINRA said that these failures caused the broker-dealer to use erroneous data when calculating the estimated yield and annual income figures for money market funds. Further, FINRA found that upon being notified by customers of the inaccuracies on their account statements, the broker-dealer failed to promptly investigate the reports.

As a result, FINRA concluded that the broker-dealer violated FINRA Rules 2210 ("Communications with the Public"), 3110 ("Supervision"), 4511 ("General Requirements") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker-dealer agreed to a (i) censure and (ii) $800,000 fine.

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