Robert W. Baird & Co. Incorporated: investment adviser

Item 11 questions answered Yes

These questions cover the firm and its advisory affiliates.

• In the past ten years, have you or any advisory affiliate: been convicted of or pled guilty or nolo contendere ("no contest") in a domestic, foreign, or military court to a misdemeanor involving: investments or an investment-related business, or any fraud, false statements, or omissions, wrongful taking of property, bribery, perjury,
• Has the SEC or the Commodity Futures Trading Commission (CFTC) ever: found you or any advisory affiliate to have been involved in a violation of SEC or CFTC regulations or statutes?
• Has the SEC or the Commodity Futures Trading Commission (CFTC) ever: entered an order against you or any advisory affiliate in connection with investment-related activity?
• Has the SEC or the Commodity Futures Trading Commission (CFTC) ever: imposed a civil money penalty on you or any advisory affiliate, or ordered you or any advisory affiliate to cease and desist from any activity?
• Has any other federal regulatory agency, any state regulatory agency, or any foreign financial regulatory authority: ever found you or any advisory affiliate to have been involved in a violation of investment-related regulations or statutes?
• Has any self-regulatory organization or commodities exchange ever: found you or any advisory affiliate to have been involved in a violation of its rules (other than a violation designated as a "minor rule violation" under a plan approved by the SEC)?
• Has any self-regulatory organization or commodities exchange ever: disciplined you or any advisory affiliate by expelling or suspending you or the advisory affiliate from membership, barring or suspending you or the advisory affiliate from association with other members, or otherwise restricting your or the advisory affiliate's activities?
• F. Has an authorization to act as an attorney, accountant, or federal contractor granted to you or any advisory affiliate ever been revoked or suspended?

Actions about the firm (13)

1. Mar 23, 2026
   Regulatory Action: Massachusetts Securities Division FinalSanctions: Civil and Administrative Penalt(ies) /Fine(s); (1) cease and desist from further acts and practices in violation of the act and regulations; (2) censure with respect to the · Fine: $57,500 · Begun Mar 20, 2026 · Resolved Mar 23, 2026 · Order · Docket R-2025-0421

   Robert W. Baird & Co. Incorporated engaged in acts and practices in violation of the act and regulations by not ensuring that its investment adviser representatives, who had a place of business in Massachusetts, were properly registered with Massachusetts prior to providing investment advisory services.

   Administrative fine in the amount of $57,500 paid in full on 3/24/2026.

   The Massachusetts Securities Division alleged that the firm failed to ensure that two investment adviser representatives with a place of business in Massachusetts were properly registered as investment adviser representatives in the state prior to providing investment advisory services. Specifically, the division alleged that the representatives began providing advisory services while their Massachusetts investment adviser representative registrations were incomplete due to the absence of required criminal offender record information (CORI) acknowledgement forms. As a result, the representatives provided investment advisory services to Massachusetts clients while unregistered. No client harm was alleged. Baird cooperated fully and corrected the issue. As part of the settlement, baird agreed to: a censure, cease and desist from further violations, review its applicable written supervisory policies and procedures, and pay a $57,500 administrative fine. After the division made baird aware of their unique form requirements, the firm promptly obtained the necessary documents to complete the application process, baird also took steps to modify its written supervisory procedures to align with the division's requirements to avoid recurrence of this issue. No information Filed

2. Mar 6, 2025
   Regulatory Action: FINRA FinalFine: $100,000 · Begun Mar 6, 2025 · Resolved Mar 6, 2025 · Acceptance, Waiver & Consent(AWC) · Docket 2022075391301

   Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it, as successor-in-interest to hefren-tillotson, violated reg bi's compliance obligation. The findings stated that hefren-tillotson's registered representatives recommended that customers open portfolio review program accounts, which enrolled the customers in an advisory service, even though the customers were already receiving those services through their existing or simultaneously opened portfolio review or investment advisory accounts. These customers did not receive any additional services by opening these accounts. As a result, these customers paid $557,830.64 in unnecessary account fees. Subsequently, baird voluntarily discontinued charging portfolio review fees and recommending portfolio review accounts after its acquisition of hefren-tillotson's brokerage business. The findings also stated that hefren-tillotson's written procedures, and supervisory system, were not reasonably designed to achieve compliance with reg bi's requirement that account-type recommendations are in the customer's best interest. The firm's WSPS did not provide any procedures or guidance regarding the factors to consider when recommending portfolio review program accounts. Moreover, the firm's WSPS did not require representatives to consider whether customers would benefit from a recommendation to open a new portfolio review account when the customer was already receiving the services provided in connection with that account type. The firm's WSPS also failed to detail any steps that principals should take to determine whether an account-type recommendation was in the customer's best interest in light of the customer's investment profile, the costs of such an account, and the services provided in connection with that account.

   The firm was censured, fined $100,000, and ordered to pay $557,830.64, plus interest, in restitution to customers.

   As set forth in the letter of acceptance, waiver and consent ("AWC"), all of the activities/violations/matters described in the AWC occurred prior to the time hefren-tillotson merged into baird. Baird, as successor-in-interest to hefren-tillotson, voluntarily discontinued the portfolio review program prior to the time these accounts were at baird. FINRA also recognized that baird provided substantial assistance in calculating appropriate restitution.

3. Nov 7, 2023
   Regulatory Action: FINRA FinalSanctions: Censure · Fine: $519,646 · Begun Nov 7, 2023 · Resolved Nov 7, 2023 · Acceptance, Waiver & Consent(AWC) · Docket 2020068655201

   Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that its supervisory system did not provide certain customers with mutual fund sales charge waivers and fee rebates to which they were entitled through rights of reinstatement offered by mutual fund companies. The findings stated that the firm's system that provided customers with rights of reinstatement benefits on eligible transactions was not reasonably designed in two basic respects. First, the firm's oversight of discounts available through rights of reinstatement relied on an automated alert that was designed primarily to monitor for mutual fund switches that occurred within 90 days of a prior sale. Thus, the alert was not designed to, and did not, capture all transactions eligible for reinstatement privileges because many funds' reinstatement periods exceeded 90 days. Second, the firm relied on an ineffective review of these alerts-based on a manual review of random samples-to supervise and confirm whether the firm credited eligible customers with reinstatement privileges. As a result of its supervisory deficiencies, baird did not provide accounts with rights of reinstatement benefits to which they were entitled, and customers paid $519,646.23 in excess sales charges and fees. The firm has since enhanced its supervisory system.

   The firm paid $519,646.23 in restitution to customers prior to the effective date of this AWC.

   Upon receipt of FINRA's sweep inquiry in 2021, baird conducted an internal review to identify potentially disadvantaged customers and calculated a remediation amount, voluntarily extending the review period beyond FINRA's requested date. Prior to resolving the matter with FINRA, baird proactively remediated 2,300 customers a total of $519,646.23, plus interest, for an average amount of impact per customer of approximately $225.00. Baird also enhanced its supervisory system, including by creating and implementing new exception reports designed specifically to identify missed rights of reinstatement. These enhancements also automated the previously manual review.

4. Sep 29, 2023
   Regulatory Action: SEC FinalSanctions: Cease and Desist · Fine: $15.0M · Begun Sep 29, 2023 · Resolved Sep 29, 2023 · Order · Docket 3-21768

   The Securities and Exchange Commission ("commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted against Robert W. Baird & Co. Incorporated ("respondent" or "baird"). Respondent has submitted an OFFER of settlement ("OFFER") that the commission has determined to accept. The commission finds that the federal securities laws impose recordkeeping requirements on broker-dealers and registered investment. These proceedings arise out of the failure of baird employees throughout the firm, including at senior levels, to adhere to certain of these requirements and baird's own policies. Using their personal devices, these employees communicated both internally and externally by personal text messages ("off-channel communications"). From at least January 2019, baird employees sent and received off-channel communications that related to the business of the broker-dealer and registered investment adviser operated by baird. Respondent did not maintain or preserve the substantial majority of these written communications. Respondent's failure was firm-wide and involved employees at various levels of authority. As a result, baird violated section 17(a) of the Exchange Act and rule 17A-4(b)(4) thereunder and section 204 of the Advisers Act and rule 204-2(a)(7) thereunder. Baird's supervisors, who were responsible for supervising junior employees, communicated off-channel using their personal devices. Baird's failure to implement its policies and procedures that prohibit such communications led to its failure to reasonably supervise its employees within the meaning of section 15(b)(4)(e) of the Exchange Act and section 203(e)(6) of the Advisers Act. During the time period, baird received and responded to commission subpoenas for documents and/or records requests in numerous commission investigations. As a result, baird's recordkeeping failures likely impacted the commission's ability to carry out its regulatory functions and investigate violations of the federal securities laws across these investigations. Commission staff uncovered baird's misconduct after commencing a risk-based initiative to investigate the use of off-channel and unpreserved communications at broker dealers. Baird has initiated a review of its recordkeeping failures and begun a program of remediation. As a result of its conduct, from at least January 2019 through the date of this order, respondent willfully violated section 17(a) of the Exchange Act and rule 17A-4(b)(4) thereunder and section 204 of the Advisers Act and rule 204-2(a)(7) thereunder. Furthermore, baird failed to reasonably to supervise its employees with a view to preventing or detecting certain of its employees' aiding and abetting violations of section 17(a) of the Exchange Act and rule 17A-4(b)(4) thereunder, within the meaning of section 15(b)(4)(e) of the Exchange Act; and section 204 of the Advisers Act and rule 204-2(a)(7) thereunder, within the meaning of section 203(e)(6) of the Advisers Act.

   The firm was ordered to cease and desist, is censured, shall pay a civil money penalty of $15,000,000, and shall comply with certain undertakings.

   In September 2023, baird entered into an offer of settlement with the SEC (the "settlement"), in which it admitted that it violated section 17(a) of the Exchange Act and rule 17A-4(b)(4) thereunder and section 204 of the Advisers Act and rule 204-2(a)(7) thereunder for failing to maintain records of certain business-related communications made by baird associates when they used their personal devices ("off-channel communications") and for failing to supervise its associates' business-related communications. The settlement was related to an SEC risk-based initiative, whereby the SEC investigated a large number of financial services firms to determine whether those firms were properly retaining business-related text and instant messages and other off-channel communications sent and received on employees' personal devices. Following the commencement of the SEC's initiative, baird cooperated with the SEC and conducted voluntary interviews of a sampling of baird supervisors to gather and review messages found on their personal devices. It was discovered that certain baird supervisors communicated off- channel using non-baird approved methods on their personal devices about baird's broker-dealer and investment adviser businesses. As part of the settlement, baird was censured and ordered to cease and desist from future violations of section 17(a) of the Exchange Act and rule 17A-4(b)(4) thereunder and section 204 of the Advisers Act and rule 204-2(a)(7) thereunder and to pay a civil monetary penalty of $15 million. In addition, baird agreed to certain undertakings, including retaining an independent compliance consultant to conduct a review of baird's policies and procedures, training, surveillance program, technology solutions and similar matters related to off-channel communications.

5. Aug 31, 2022
   Regulatory Action: FINRA FinalFine: $150,000 · Begun Aug 31, 2022 · Resolved Aug 31, 2022 · Acceptance, Waiver & Consent(AWC) · Docket 2020065107401

   Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it used a published commission schedule pursuant to which it charged commissions on low-principal transactions that were not fair and reasonable. The findings stated that for all equity transactions, the firm imposed a minimum commission of $100, in addition to a handling fee. As a result of the minimum commission, the firm charged a total of at least $266,481 in unfair commissions of transactions on behalf of customers. The commissions charged ranged from over five percent to 93 percent of the transactions' principal value. The findings also stated that the firm's supervisory system was unreasonable because in establishing its commission schedule and in setting commissions on transactions, the firm did not appropriately consider the factors set forth in FINRA rule 2121.01 for transactions when the minimum $100 commission was imposed. Specifically, while the firm generally flagged transactions where customers were charged over five percent of principal and reviewed those transactions for excessive commissions, the firm's supervisory system did not flag for review transactions when the firm charged the minimum $100 commission.

   The firm was censured, fined $150,000.00 and ordered to pay $266,481, plus interest, in restitution to customers.

   The firm accepted and consented without admitting or denying the findings and the imposition of a $150,000 fine. After FINRA discussed the $100 minimum equity commission with Robert W. Baird & Co., incorporated ("BAIRD") during the 2020 routine examination, BAIRD promptly modified its published commission schedule to eliminate the minimum commission amount and updated its written supervisory procedures to align with the new published schedule. BAIRD also took steps to make payments to the affected customers, which on average amount to $36.62 per trade and $57.64 per customer. BAIRD will continue to make efforts to ensure that it charges fair prices and commissions on all securities transactions with its customers.

6. Dec 13, 2021
   Regulatory Action: New York Stock Exchange FinalSanctions: Censure · Fine: $12,500 · Begun Dec 15, 2020 · Resolved Dec 13, 2021 · Acceptance, Waiver & Consent(AWC) · Docket NYSE PROCEEDING NO. 2020-12-15- 00012

   On June 11, 2018, baird received orders from a customer to buy security 1. After receiving the orders, baird routed them, as two separate parent orders to two different NYSE floor broker firms. Both recipient floor broker firms, as executing brokers, broke up the parent orders into child orders and routed them to the market for execution. Baird's sending of these orders to two different floor broker firms inadvertently led to competing child orders on behalf of the customer in security 1 that could execute at the same time and price over a six-hour period. Neither floor broker firm was aware the other firm was handling the competing orders. One purpose of NYSE rule 122 is to prevent circumvention of the NYSE parity allocation rules so that a member organization or its customer cannot obtain preferential execution by sending competing orders to multiple floor brokers at the same time. Because baird routed orders to NYSE floor broker firms for execution, the firm had obligations to implement reasonably designed supervisory systems, including WSPS, to detect and prevent routing of potentially competing orders to two different floor brokers. Specifically, baird should have had supervisory procedures in place to conduct reasonable due diligence to assure that orders it was routing to different floor broker firms in the same security that could have executed at the same time and price were not for the account of the same principal. Prior to October 2020, the firm had no procedures in place addressing NYSE rule 122.

   Baird paid the $12,500.00 fine on 12/29/2021

   The firm accepted and consented without admitting or denying the findings and the imposition of a $12,500 fine. Upon identification of the order routing incident by the NYSE, baird promptly re-educated trading staff on the requirements of NYSE rule 122 and will continue to appropriately educate and remind trading staff of their responsibilities. Baird also took steps to update its supervisory system by implementing a supervisory review procedure specific to the requirements of NYSE rule 122.

7. Jun 7, 2019
   Regulatory Action: FINRA FinalSanctions: Other; N/a · Fine: $150,000 · Begun Jun 7, 2019 · Resolved Jun 7, 2019 · Acceptance, Waiver & Consent(AWC) · Docket 2017052842901

   Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it published seven research reports about an issuer without disclosing that the research analyst who authored the reports was engaged in employment discussions with the issuer that constituted an actual, material conflict of interest. The findings stated that the research analyst's candidacy for employment at the issuer was clearly viable, and the issuer and the research analyst had expressed mutual interest and taken concrete steps in furtherance of their employment discussions. During these employment discussions, the research analyst authored and the firm published the seven research reports on the issuer without disclosing that the research analyst was engaged in the employment discussions with it. The firm's failure to disclose the actual, material conflict of interest arising from the research analyst's employment discussions with the issuer in the research reports authored by him and published by the firm made those reports misleading.

   The firm was censured and fined $150,000.00

   In response to this matter, baird took proactive measures to reiterate compliance policies pertaining to research disclosures on material conflicts. This involved the publication of policy reminders, discussions at monthly research department meetings, enhancement of research analyst new hire orientation, amendments to the research associate and research supervisory compliance manuals and edits to procedures regarding review of research. The firm also enhanced its research department firm element training and held discussions on relevant policy and practice at periodic research analyst meetings. Going forward, baird will continue to monitor adherence to relevant policies and will continue to appropriately educate and remind research analysts of their responsibilities. Any potential for disclosure due to similar circumstances will be reviewed by the firm's management as well as the legal and compliance department.

8. Mar 11, 2019
   Regulatory Action: SEC FinalSanctions: Other; N/a · Begun Mar 11, 2019 · Resolved Mar 11, 2019 · Order · Docket 3-19051

   Ia release 40-5148, March 11, 2019: the Securities and Exchange Commission deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be instituted against Robert W. Baird & Co. Incorporated ("respondent"). On the basis of this order and respondent's offer, the commission finds that these proceedings arise out of breaches of fiduciary duty and inadequate disclosures by the respondent in connection with its mutual fund share class selection practices and the fees it received. At times during the relevant period, respondent purchased, recommended, or held for advisory clients mutual fund share classes that charged 12B-1 fees instead of lower-cost share classes of the same funds for which the clients were eligible. Respondent received 12B-1 fees in connection with these investments. Respondent failed to disclose in its form ADV or otherwise the conflicts of interest related to (a) its receipt of 12B-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the relevant period, respondent received 12B-1 fees for advising clients to invest in or hold such mutual fund share classes. As a result of the conduct, respondent willfully violated sections 206(2) and 207 of the Advisers Act.

   The respondent shall cease and desist from committing or causing any violations and any future violations of sections 206(2) and 207 of the Advisers Act. Respondent is censured, shall pay disgorgement of $3,946,606.10 and prejudgment interest of $212,561.34, and shall comply with the undertakings enumerated in the offer of settlement.

   Robert W. Baird & Co. Incorporated (BAIRD), along with many other investment advisory firms, voluntarily participated in the SEC's share class selection disclosure (or SCSD) initiative. Under the SCSD initiative, investment advisory firms were offered the opportunity to voluntarily self-report violations of the federal securities laws relating to mutual fund share class selection and related disclosure issues and agree to standardized settlement terms imposed by the SEC, including returning money to affected investors. The central issue identified by the SEC in establishing the SCSD initiative was that, in many cases, investment advisory firms bought for or recommended to their clients mutual fund share classes that had distribution or service fees (commonly known as 12B-1 fees) paid out of fund assets to the firms when lower-cost share classes were available to those clients, and the investment advisory firms did not adequately disclose the conflict of interest associated with those share classes. On March 11, 2019, the SEC issued orders under the SCSD initiative to a total of 79 investment advisers (including BAIRD) reflecting the standardized settlement terms. Additional orders are expected to be issued to more firms. The order pertains to BAIRD's private wealth management (PWM) investment advisory business. BAIRD's asset management business and the BAIRD funds were not subject to the order. In response to the SEC's share class selection disclosure initiative, BAIRD has made changes to its PWM investment advisory programs in which mutual funds available in those programs do not include share classes that pay 12b- 1 fees. The mutual fund share classes available to clients in BAIRD's investment advisory programs are generally those that are lowest cost share classes most widely offered by each mutual fund family across its various funds to most types of eligible investors.

9. Sep 26, 2016
   Regulatory Action: FINRA FinalFine: $12,500 · Begun Sep 26, 2016 · Resolved Sep 26, 2016 · Acceptance, Waiver & Consent(AWC) · Docket 2014040421301

   Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it traded ahead of customer orders and also executed customer orders outside normal market hours, contrary to the customers' instructions. The findings stated that the firm also failed to have adequate supervision concerning the trading ahead rule, in that its written supervisory procedures failed to provide for the minimum requirements for adequate written supervisory procedures concerning order protection requirements applicable to customer orders in OTC securities.

   The firm was censured, fined $12,500, pay restitution to customers in the total amount of $125.54, plus interest, and undertakes to revise its written supervisory procedures.

10. Sep 8, 2016
    Regulatory Action: SEC FinalFine: $250,000 · Begun Sep 8, 2016 · Resolved Sep 8, 2016 · Order · Docket 3-17532

    SEC ia release 4526/September 8, 2016: the Securities and Exchange Commission (commission) deems it appropriate that cease-and- desist proceedings be, and hereby are, instituted pursuant to section 203(k) of the Investment Advisers Act of 1940 (Advisers Act), against Robert W. Baird & Co. Incorporated. This matter arises from the firm's failure to adopt and implement adequate policies and procedures to track and disclose trading away practices by certain of the subadvisors participating in the firm's wrap fee programs. The firm, in its advisory capacity, offers its advisory clients the opportunity to invest in separately managed wrap fee programs. Through these programs, the firm's advisory clients pay an annual fee in exchange for receiving access to select subadvisors and trading strategies, advice from the firm's financial advisors, and trade execution services through the firm at no additional cost. However, if a subadvisor chooses not to direct the execution of particular equity trades through the firm and the executing broker charges a commission or fee, the firm's advisory clients often are charged additional commissions or fees for those transactions. This practice is referred to as "trading away" and these types of trades are frequently called "trade aways." Historically, the firm did not track or monitor which subadvisors were trading away from the firm, how often those subadvisors were trading away, or the specific costs associated with those trade aways. The firm began collecting cost information from subadvisors who were trading away but failed to adopt or implement any policies and procedures designed to provide information to the firm's clients and financial advisors about the amount of the additional costs of trading away. Without the availability of such information, the firm's financial advisors could not separately consider the costs associated with trading away practices in conducting their initial and periodic suitability analyses for advisory clients in wrap fee programs whose funds were managed by certain subadvisors. By failing to adopt and implement such policies and procedures, the firm violated section 206(4) of the Advisers Act and rule 206(4)-7 thereunder.

    The firm was ordered to cease and desist, fined $250,000 and ordered to comply with the undertakings enumerated in the order.

    Baird, without admitting or denying the findings, consented to the sanctions and findings of the SEC that it violated section 206(4) of the Advisers Act and rule 206(4)-7 thereunder by failing to adopt and implement adequate policies and procedures to track and disclose trading away practices by certain of the subadvisors participating in baird's wrap fee programs offered through its private wealth management department. Through these programs, baird's advisory clients pay an annual fee in exchange for receiving access to select subadvisors and trading strategies, advice from baird's financial advisors, and trade execution services through baird at no additional cost. However, if a subadvisor chooses not to direct the execution of particular equity trades through baird in order to fulfill its best execution obligation and the executing broker charges a commission or fee, baird's advisory clients often are charged additional commissions or fees for those transactions, which is often embedded in the price paid or received for the security. This practice is referred to as "trading away" and these types of trades are frequently called "trade aways." Baird was found to have failed to adopt or implement policies and procedures designed to provide specific information to baird's clients and financial advisors about the costs of trading away. Baird agreed to provide additional disclosure to clients and review and, as necessary, update its policies and procedures.in resolving this matter, the SEC recognized both the voluntary remedial acts promptly undertaken by baird and its cooperation with the SEC staff.

11. Aug 17, 2016
    Regulatory Action: FINRA FinalFine: $6,500 · Begun Aug 17, 2016 · Resolved Aug 17, 2016 · Acceptance, Waiver & Consent(AWC) · Docket 2015047484601

    Without admitting or denying the findings, the firm consented to the sanction and to the entry of findings that it failed to report the correct trade execution time for transactions in trade reporting and compliance engine (TRACE)-eligible securitized products to TRACE and failed to show the correct execution time on brokerage order memoranda.

    The firm was fined $6,500.00

12. Jul 27, 2016
    Regulatory Action: FINRA FinalFine: $200,000 · Begun Jul 27, 2016 · Resolved Jul 27, 2016 · Acceptance, Waiver & Consent(AWC) · Docket 2014040147502

    Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that the firm and a firm supervisor did not reasonably supervise a former registered representative's misuse of customer funds. The findings stated that the supervisor, who was the registered representative's direct supervisor, did not reasonably follow-up on red flags associated with a trade correction request submitted by the registered representative that should have alerted him to the registered representative's misuse of customer funds. The supervisor also did not follow certain of the firm's written supervisory procedures (WSPS) relating to trade corrections which, if followed, would have prevented the registered representative's misuse of customer funds. The findings also stated that in reviewing and approving the trade correction request, the supervisor did not follow some of the firm's WSPS. The firm's WSPS stated that customer losses caused by a registered representative's error would be borne by the firm or the registered representative. The WSPS further stated that supervisors were required to obtain and maintain documentation and verification of the reasons for, and details surrounding, the trade errors and correction. Contrary to these procedures, the supervisor approved the trade correction request when the resulting correction allocated the trade loss to the customer rather than the firm or the registered representative, and he did not reasonably document the reasons for, or details surrounding, the trade correction. After it became clear that the customer of the registered representative did not, in fact, agree to purchase the stock at above-market value, the firm reimbursed the customer for the loss. The findings also included that the firm did not establish and maintain a supervisory system, including WSPS, for correcting trade errors that was reasonably designed to ensure compliance with applicable securities laws, regulations and rules. In particular, the firm did not implement reasonable WSPS, guidance, or training to adequately describe the supervisory steps associated with reviewing, approving, and processing trade corrections. The firm's WSPS for handling trade corrections were vague and ambiguous and firm supervisors did not understand how to interpret or apply the procedures. FINRA found that the firm recognized, that its WSPS for correcting trade errors needed to be updated because they were vague and ambiguous. Nonetheless, the firm did not take any steps to enhance the WSPS or provide supervisors with training or guidance on the relevant WSPS until a year later. The firm did not complete its enhancement of its WSPS for trade corrections until early 2016.

    The firm was censured, fined $200,000, and undertakes to, within 30 days of approval of this AWC, provide a written certification to FINRA that the firm's systems, policies and procedures for correcting trade errors are reasonably designed to achieve compliance with applicable securities laws, regulations and rules.

13. Apr 15, 2016
    Regulatory Action: FINRA FinalBegun Apr 15, 2016 · Resolved Apr 15, 2016 · Acceptance, Waiver & Consent(AWC) · Docket 2015045594601

    Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to reasonably supervise the application of sales charge waivers to customers. The findings stated that the firm failed to apply the waivers to mutual fund purchases made by certain retirement plan and charitable organization customers (eligible customers) that were eligible to purchase class a shares in certain mutual funds without a front-end sales charge, and instead sold them class a shares with a front-end sales charge or class b or class c shares with back-end sales charges and higher ongoing fees and expenses. The findings also stated that these sales disadvantaged eligible customers by causing such customers to pay higher fees than they were actually required to pay. The findings also included that the firm relied on its financial advisors to determine the applicability of sales charge waivers, but failed to maintain adequate written policies or procedures to assist financial advisors in making this determination. FINRA found that the firm failed to adequately notify and train its financial advisors regarding the availability of mutual fund sales charge waivers for eligible customers. The firm failed to adopt adequate controls to detect instances in which they did not provide sales charge waivers to eligible customers in connection with their mutual fund purchases. As a result of the failure of the firm to apply available sales charge waivers, the firm estimates that eligible customers were overcharged by approximately $1.8 million for mutual fund purchases made since July 1, 2009.

    The firm is censured, and will provide remediation to eligible customers who qualified for, but did not receive, the applicable mutual fund sales charge waivers by agreeing to pay restitution, plus interest, to eligible customers in the amount of $2.1 million.

    In resolving this matter, FINRA has recognized the extraordinary cooperation of the firm for having: (1) initiated, prior to detection or intervention by a regulator, an investigation to identify whether eligible customers received sales charge waivers during the relevant period; (2) promptly established a plan of remediation for eligible customers who did not receive appropriate sales charge waivers; (3) promptly self-reported to FINRA; (4) agreed to promptly take action and remedial steps to correct the violative conduct; and (5) agreed to employ subsequent corrective measures, prior to detection or intervention by a regulator, to revise its procedures to avoid recurrence of the misconduct.

Disclosures filed elsewhere

The firm's Form ADV names these and the kind of action only; the details are on the named firm's own filing.

• 1 criminal disclosure about Mahamud, Mohamed, T.
• 1 regulatory action disclosure about Griffith, R, Parker
• 1 regulatory action disclosure about Krueger, Joseph, Daniel
• 1 regulatory action disclosure about Estes, Adam, Denny
• 1 regulatory action disclosure about Fitzgerald, Patrick, John

Form ADV Item 11 and its Disclosure Reporting Pages, via the SEC record. All adviser disciplinary records.