Why are Financial Advisers and Brokers getting into trouble over Unit Investment Trusts (UITs)?
Get Your Free Consultation
As reported in InvestmentNews, three Raymond James entities have agreed to pay over $15 million to resolve an investigation by the SEC. The settlement and SEC order focused on Raymond James’s actions in improperly charging certain clients advisory fees when the...read more
FINRA has been investigating the sale of Unit Investment Trusts (UITs). In recent high-profile cases, financial advisers and brokers at Morgan Stanley and Raymond James have been disciplined or fired for recommending premature sales or rollovers of Unit Investment Trusts (UITs). UITs are fixed, relatively long-term investments. They are meant to be bought and held by an investor for a period of around 2 years. After the set period of time, the UIT is then sold/redeemed directly back to the company for (hopefully) a decent profit. See this Investopedia article for a simple primer on how UITs work. As an over-simplification, a UIT should be treated by a careful investor as akin to a 2-year Certificate of Deposit, something to be bought and held for the full redemption period.
Broker and adviser commissions for sales of UITs are rather high: often 1.95% to 3.95%. Some unscrupulous brokers and financial advisers are recommending that their clients sell or flip these UITs every 6 months or so, generating sizable commissions for the advisers at the detriment of their clients. If an investor purchases a UIT through his or her financial adviser or broker, the adviser/broker gets a one-time commission for the 2-year investment product. But if the adviser/broker wrongfully advises his or her client to sell or roll-over the UIT prematurely, the adviser/broker gets another quick commission, while the investor loses out on the full profits he or she is entitled to under the ownership of the UIT.
If you, or a loved, one was tricked by your broker or financial adviser into selling or rolling over your UIT before its redemption period, call the experienced securities arbitration attorneys at Epperson & Greenidge, P.A. today for a free consultation at (877) 445-9261 or contact us on-line. We may be able to file a FINRA arbitration claim on your behalf, and recover your lost money. We are paid on a contingency basis, meaning we only earn our fee if you win.