SagePoint Ordered By FINRA To Pay $1.6 Million For Alleged Unit Investment Trust (UIT) Violations

DID YOUR SAGEPOINT ADVISOR SELL YOU UITs?

SagePoint Financial has been ordered by the Financial Industry Regulatory Authority (FINRA) to pay $1.3 million in restitution to customers for alleged failings related to unit investment trusts (UITs). SagePoint was also ordered by FINRA to pay $300,000 for supervisory violations related to UITs.

SagePoint signed a letter of Acceptance Waiver and Consent (AWC) without admitting or denying the allegations made by FINRA.

The AWC states that “From January 2013 through December 2017 (the Relevant Period), SagePoint failed to establish and maintain a supervisory system and failed to establish, maintain, and enforce written supervisory procedures (WSPs) that were reasonably designed to supervise the suitability of representatives’ recommendations to customers for early rollovers of Unit Investment Trusts.”

What Is A Unit Investment Trust (UIT)?

A Unit Investment Trust (UIC) is an investment company that investors can buy shares or “units” of in a portfolio of securities in a one-time public offering. According to the AWC “A UIT terminates on a specific maturity date, often after 15 or 24 months, at which point the underlying securities are sold and the resulting proceeds are paid to the investors. Generally, a UIT’s portfolio is not actively managed between the trust’s inception and its maturity date.”

UITs are usually offered in “series” so that the offering period of a new series is the maturity date of the last series. Consecutive series will often have similar investment objectives.

Investors have to pay several sales charges related to a UIT, including an initial sales charge, a deferred sales charge, and a creation and development fee.

When an investor sells a UIT before its maturity date and rolls it over to another UIT, they have to pay greater sales charges than if they hold it to maturity. For that reason, FINRA questions the suitability of brokers or financial advisors recommending that their customers do so.

FINRA claims that from 2013-2017, SagePoint charged customers $1.3 million in additional sales charges from early or series-to-series rollovers.

SagePoint is not the only brokerage firm to be recently fined by FINRA for UIT rollovers. In June, 2020, FINRA fined Stifel, Nicolaus & Company $1.75 million for alleged inaccurate information and supervisory violations related to UIT rollover costs. They were also ordered to pay $1.9 million in restitution to customers.

Silver Law Group represents investors who have lost money in Unit Investment Trusts or have been charged excessive fees or commissions. Investors can file securities arbitration claims to recover their losses. Our attorneys represent investors nationwide in claims against brokers for the sale of UIT’s involving allegations of breach of fiduciary duty, negligence, churning and failure to supervise amongst other claims.

SagePoint And GPB Capital

SagePoint is a broker-dealer licensed in all 50 states with over 1,800 registered representatives across 890 branch offices. SagePoint is part of the Advisor Group of companies, which also includes Woodbury Financial Services, Royal Alliance, and FSC Securities Corporation.

Silver Law Group filed the first FINRA arbitration claim against SagePoint Financial to recover investment losses for client who invested $400,00 in the GPB Automotive Fund. GPB Capital is an alternative asset management company that is under investigation by multiple federal and state agencies and accused of being a Ponzi scheme. Since that first arbitration claim, we have filed additional claims against SagePoint and other firms.

Silver Law Group May Be Able To Help You Recover Investment Losses

Silver Law Group has extensive experience representing investors in securities and investment fraud cases nationwide. Our lawyers can help you recover investment losses due to stockbroker misconduct, such as unsuitable investments, and most cases are handled on a contingency fee basis, meaning no money is owed until we recover your losses for you.

Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and has represented investors in securities and investment fraud cases. Please contact us for a confidential consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.