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B-D Agrees to Pay Clients $1.37M Over Self-Reported Sales Charge Waiver Failures

September 7, 2018

Lincoln Investment Planning has agreed to pay back $1.37 million to clients to whom it allegedly failed to pass on sales charge waivers, InvestmentNews writes.

Since 2011, Lincoln allegedly sold class A shares with front-end sales charges or class B or C shares with back-end sales charges to certain clients who were eligible to buy Class A shares in certain mutual funds without paying the front-end charge, according to Finra’s order cited by the publication.

The firm allegedly also lacked a supervisory system to make sure eligible customers received the sales charge waivers, the regulator said, according to InvestmentNews.

Lincoln agreed to the order without admitting or denying fault, the publication writes.

In its order, Finra also said Lincoln provided “extraordinary cooperation” that included starting the investigation into discounts and paying clients restitution, according to InvestmentNews.

“We self-reported this to Finra and had no client complaints,” Edward Forst, Lincoln’s CEO, tells the publication. “Because of the way we handled the matter, we had no fine from Finra.”

Regulators have been zeroing in on the sales of mutual funds to clients eligible for sales charge waivers, InvestmentNews writes. The SEC offered an amnesty in February to advisors who self-report fee violations.

The amnesty ended in June, and in August the SEC settled with a Utah RIA for $153,000 for allegedly selling clients higher-fee mutual fund share classes even though they were eligible for the lower-cost share classes.


Finra said in December it was concerned about brokers recommending high-fee share classes without assessing whether the investments were suitable, InvestmentNews writes.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.