According to FINRA, MML Investors Services, LLC was censured and ordered to pay $617,726.28 in restitution to customers for failing to reasonably supervise registered representatives' 529 plan share-class recommendations and for failing to reasonably supervise mutual fund and 529 plan transactions for available breakpoints. No fine was imposed in recognition of the firm's extraordinary cooperation through voluntary participation in FINRA's 529 Plan Share Class Initiative.

The firm was found in violation of supervisory requirements in two key areas. First, regarding 529 plan share classes, MML's supervisory systems and procedures were not reasonably designed. The firm failed to provide supervisors with adequate guidance and information necessary to evaluate suitability of representatives' share-class recommendations and failed to provide representatives with guidance regarding share-class suitability factors specific to 529 plan investments. Although supervisors were required to review and approve all 529 plan transactions, procedures did not specifically address the relationship between account beneficiary age, years until funds would be needed for education expenses, and share-class suitability. Supervisors approved 529 plan Class C share transactions without access to or consideration of beneficiary age, a relevant suitability factor. Moreover, the firm conducted no training for representatives regarding 529 plan share classes.

Second, regarding breakpoints, MML failed to reasonably supervise mutual fund and 529 plan transactions for available breakpoint discounts. The firm's supervisory system was not reasonably designed to identify and apply all available breakpoints. The firm required representatives to complete breakpoint worksheets for Class A share purchases, but did not require and representatives often could not complete worksheets for direct or automatic contribution transactions made subsequent to initial investments, because such contributions were sometimes made without representative involvement. The firm relied on an exception report to identify missed breakpoints, but this report only captured transactions of $500 or more. Consequently, the firm failed to have a system reasonably designed to aggregate customers' contributions to mutual funds and 529 plans for breakpoint purposes if contributions were less than $500. Breakpoints are volume discounts that reduce sales charges for larger investments, and investors should understand how to qualify for them to minimize costs.