The complaint states that Janney and Querzoli split the front-loaded commissions generated by the purchases of class A shares, with Janney receiving about 60 percent of commissions from the purchases Querzoli made.
“Querzoli continued his practice of purchasing class A shares for at least four customers during the time he was under review and for several years thereafter until his termination,” Massachuetts said in its complaint.
The complaint further alleges that Querzoli made unsolicited trades on at least one customer’s behalf, without the authorization to do so.
The state Securities Division is seeking an order requiring Janney to conduct a review of all accounts serviced by Querzoli and engage an independent compliance consultant to review and establish written policies and procedures related to short-term trading of class A shares of mutual funds.
The division is also asking for an administrative fine, censure and restitution to fairly compensate investors for their losses, which will be determined when investor accounts impacted by fund share violations are tallied.
The Massachusetts action mirrors ongoing investigations at both the Securities and Exchange Commission and Finra into mutual fund share class violations. The SEC announced in March that the first phase of its voluntary share class disclosure initiative had resulted in $125 million in commission overcharges would be returned to retail investors.