Robert W. Baird & Co. Agrees to Pay $519,000 in Restitution for Excess Charges and Fees

The Financial Industry Regulatory Authority censured and ordered restitution from Robert W. Baird & Co. Inc. after 2,300 customer accounts of the full-service brokerage firms paid approximately $519,000 in excess sales charges and fees.

According to FINRA, Baird’s supervisory system did not provide certain customers with mutual fund sales charge waivers and fee rebates to which they were entitled through rights of reinstatement offered by mutual fund companies.

Specifically, Baird’s system that provided customers with rights of reinstatement benefits on eligible transactions was not reasonably designed in two basic respects. First, the firm’s oversight of discounts available through rights of reinstatement relied on an automated alert that was designed primarily to monitor for mutual fund switches that occurred within 90 days of a prior sale. Thus, the alert was not designed to, and did not, capture all transactions eligible for reinstatement privileges because many funds’ reinstatement periods exceeded 90 days. Second, the firm relied on an “ineffective review” of these alerts- based on a manual review of random samples- to supervise and confirm whether the firm credited eligible customers with reinstatement privileges. This review process was not reasonably designed or implemented to permit Baird to detect excess sales charges and fees paid by its customers.

FINRA says that Baird provided “extraordinary cooperation” and consented to a censure and restitution of $519,646.23 plus interest.

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