Janney Montgomery Scott is asking fund managers to disclose Janney’s sales waiver policies in their prospectuses, according to news reports.
Under the firm’s waiver policies, effective May 1, 2020, Janney investors in A shares of applicable funds who made the purchase by reinvesting capital gains distributions and dividends will be eligible for front-end sales loads waivers, FA-IQ sister publication Ignites writes.
Likewise, the waivers apply when investors convert C shares to A shares after the expiration of the loads on those share classes, according to Ignites.
Janney’s disclosure request reflects existing policy at the company, people familiar with the matter tell Ignites.
Nonetheless, it’s also likely “the culmination of Janney’s response to several regulatory events,” Jaqueline Hummel, managing director at Hardin Compliance Consulting, tells the publication.
In October 2015, Finra ordered Janney to pay $1.2 million for alleged failures to pass on waivers to eligible clients on Class A shares and to supervise its brokers involved in the sales. That month, Finra also ordered Edward Jones to pay $13.5 million, Stifel Nicolaus $2.9 million, AXA Advisors $602,000 and Stephens $150,000 over the same alleged failures.
Meanwhile, the SEC’s Regulation Best Interest, the package of rules on broker-dealer and investment advisor conduct that goes into effect in June, could lead to more filings such as Janney’s, Paul Ellenbogen, vice president at financial services and analytics firm Broadridge, tells Ignites.
That’s because the rule requires broker-dealers to review certain practices, such as loads and commissions, that could result in conflicts of interest, the publication writes.