Broker-Dealer Settles FINRA Charges for Erroneous Third-Party Advisor Fees

A broker-dealer settled FINRA charges for erroneously disbursing higher than agreed upon fees from customer accounts to third-party advisors.

FINRA alleged that MBSC Securities Corporation ("MBSC") failed to establish, maintain and enforce a supervisory system and written procedures to monitor the transmittal of funds from customer accounts to third parties between January 2008 and April 2017. According to FINRA, two third-party investment advisors requested payment of fees to MBSC which were higher than what they were entitled to under the Management Agreements and fee schedules. FINRA alleged that MBSC processed $971,289.07 in erroneous fee requests without proper review or verification.

Without admitting to or denying FINRA's findings, MBSC agreed to a censure and to pay over $1.2 million to the affected customers.