According to FINRA, RBC Capital Markets, LLC was censured and fined $75,000 on July 2, 2024, for failing to 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.

The firm's supervisory system did not adequately oversee discounts available through rights of reinstatement. The firm relied on an automated alert designed to identify transactions in which a customer liquidates a position in a fund family and then purchases back into the same family at a later date. However, the alert was not designed to capture all transactions eligible for reinstatement privileges. Additionally, the firm failed to reasonably review alerts that did trigger to ensure that eligible customers were credited with reinstatement privileges.

As a result of these supervisory failures, eligible customers paid $264,939.44 in excess sales charges and fees. The firm has made full restitution, plus interest, to the affected customers and was required to certify that it has remediated the issues and implemented a reasonably designed supervisory system.

This case illustrates the importance of proper supervisory systems for ensuring customers receive all fee waivers and discounts to which they are entitled. Investors purchasing mutual funds should be aware of available sales charge waivers, including rights of reinstatement, which allow investors who recently sold shares to repurchase them without paying a new sales charge. Investors should review their statements carefully and question any unexpected sales charges or fees.