After a 2016 settlement of $1.8 million over a failure to establish and maintain a supervisory system ensuring retirement plan and charitable organization customers received mutual fund sales charge waivers, MML Investors Services this week once again settled for an additional $744,200 in restitution and interest on violations relating to 529 plans, according to a Finra filing.
In both cases, knowledge of the infractions rose out of MML’s voluntary participation in Finra initiatives where member firms review their own supervisory systems and procedures and self-report their findings. Because of this, the awards reflected only restitution and interest.
“The Department of Enforcement credits MML for its extraordinary cooperation,” Monday’s filing said. “Accordingly, this AWC includes a censure and an order for restitution and estimated interest of $744,220, but no fine for the firm’s supervisory failures.”
“We are pleased to resolve this matter and put it behind us,” an MML spokesperson wrote in a statement.
From January 2013 to March 2017, MML failed to give enough guidance to its reps regarding the suitability of 529 plan investments, according to the filing. “Although firm supervisors were required to review and approve all 529 plan transactions, the firm’s procedures did not specifically address the relationship between account beneficiary age, the number of years until funds would be needed to pay qualified higher education expenses, and 529 plan share-class suitability.”
In addition, from July 2016 to October 2019, the MML system was not able to identify discount breakpoints for sales charges in accounts where direct or automatic contributions were made following an initial investment because those contributions were often made without the involvement of the registered rep, the filing said.
With much praise for MML’s thorough self-reporting, corrective actions and plan for making affected customers whole, the filing stated MML will pay restitution and interest of $493,291 to the share-class issue customers and $250,929 to the breakpoint issue customers.
MML, headquartered in Boston, has more than 7,500 financial professionals nationwide and more than $200 billion in assets under management, according to the firm’s website.