Finra Orders RBC Wealth Management to Pay One Million

INVESTMENT NEWS | December 16, 2021 | Jake Martin

Finra Orders RBC to Pay $1 Million Over Junk Bond Oversight Failures

The Financial Industry Regulatory Authority rang up RBC Wealth Management-U.S. for more than $1 million in fines and restitution over its alleged failure to properly monitor clients’ accounts for overconcentration in high-yield or “junk” bonds.

From July 2013 through June 2016, the firm failed to maintain an adequate system for supervising its representatives’ recommendations and sales of high-yield corporate and municipal bonds, according to a letter of acceptance, waiver and consent finalized on Wednesday. As a result, the Minneapolis, Minnesota-based firm failed to flag for review more than 100 client accounts with conservative investment profiles–including a 100-year-old customer–for “potentially unsuitable concentration levels,” Finra said.

RBC was found to have violated Finra Rule 2111 requiring firms and their representatives to have a “reasonable basis” to believe that recommended investments are suitable for a customer based on age, financial situation, investment experience, risk profile and other factors, according to the letter.

Without admitting or denying the industry self-regulator’s findings, RBC agreed to the sanctions, which included a censure, a $550,000 fine and restitution of $456,155, plus interest. The firm, which has around 2,000 brokers, updated its policies to prohibit purchases of high-yield bonds in the most conservative accounts and give additional guidance to brokers around suitability, according to the settlement. Read Article