FINRA Orders American Portfolios to Pay $1.2 Million Over UIT Supervision Failures

FINRA ordered American Portfolios Financial Services to pay $1,232,939 in restitution, plus interest, and fined the firm $400,000 for failures in supervising recommendations involving unit investment trusts (UITs). FINRA announced the settlement on September 22.

The regulator said the firm’s customers paid unnecessary costs and fees after recommendations to sell UITs before maturity. UITs hold a fixed portfolio of securities and generally terminate on a specified date; FINRA noted that their sales-charge structure assumes they will be held to maturity. Selling early and buying a new UIT with the proceeds can create a new sales charge.

According to FINRA, from January 2018 until American Portfolios became part of Osaic Wealth in October 2024, its supervisory system was not reasonably designed to identify representatives repeatedly recommending early UIT sales. FINRA said three representatives caused 295 investors to incur $1,232,939 in unnecessary costs and fees. The firm settled without admitting or denying the findings.

Why it matters

The action is relevant to investors who use broker recommendations for packaged securities. Fees, holding periods and the incentive to replace an existing product can materially affect returns even when the underlying holdings appear familiar. It also highlights the supervision expected of firms when recommendations can trigger repeat charges.

What to watch next

Investors can check whether a proposed product replacement has fresh sales charges, a different maturity or a documented reason for the change. FINRA’s release says individual restitution will be returned to affected customers; further details are available in the linked settlement document.