Former Oppenheimer And Current RBC Capital Markets Financial Advisor, Frederick Levine, Sanctioned By FINRA For Actively Trading Unit Investment Trusts In Client Accounts?
Frederick Levine (Fred Levine) (CRD # 1765119) is a Financial Advisor at RBC Capital Markets in Florham Park, NJ. Fred Levine previously worked for for Oppenheimer & Co. in Florham Park, NJ.
According to publicly available records released by the Financial Industry Regulatory Authority (“FINRA”), on August 3, 3030, Fred Levine was sanctioned by FINRA, suspending him for a period of three months and fining him $5,000 for allegedly recommending his customers “roll over UITs more than 100 days prior to maturity on approximately 950 occasions.”
A Unit Investment Trust is a closed-end investment company typically issues redeemable securities (or “units”), like a mutual fund, which means that the UIT will buy back an investor’s “units,” at the investor’s request, at their approximate net asset value (NAV). A UIT typically will make a one-time “public offering” of only a specific, fixed number of units (like closed-end funds). Many UIT sponsors, however, will maintain a secondary market, which allows owners of UIT units to sell them back to the sponsors and allows other investors to buy UIT units from the sponsors.
A UIT will have a termination date that is established when the UIT is created, although it may be in the distant future. In the case of a UIT investing in bonds, for example, the termination date may be determined by the maturity date of the bond investments. When a UIT terminates, any remaining investment portfolio securities are sold and the proceeds are paid to the investors.
A UIT does not actively trade its investment portfolio. That is, a UIT buys a relatively fixed portfolio of securities (for example, five, ten, or twenty specific stocks or bonds), and holds them with little or no change for the life of the UIT. Because the investment portfolio of a UIT generally is fixed, investors know more or less what they are investing in for the duration of their investment. Investors will find the portfolio securities held by the UIT listed in its prospectus. The commissions paid to brokers who sold UITs can be as high as 4%.
According to the FINRA sanction, “during the Relevant Period, Levine recommended his customers roll over Ms more than 100 days prior to maturity on approximately 950 occasions. Indeed, although his customers’ UITs typically bad a 24-month maturity period, Levine recommended that they sell their UlTs after holding them for, on average, only 260 days, and use the proceeds to purchase a new MT. Of the approximately 950 early rollovers recommended by Levine, more than 600 were “series-to-series” rollovers. In other words, on more than 600 occasions, Levine recommended that his customers roll over a UIT before its maturity date in order to purchase a subsequent series of the same UIT, which, as noted above, generally bad the same or similar investment objectives and strategies as the prior series.”
For a copy of the Letter of Acceptance, Waiver and Consent entered into between FINRA and Fred Levine, click https://www.finra.org/sites/default/files/fda_documents/2018057247201%20Frederick%20Scott%20Levine%20CRD%201765119%20AWC%20sl.pdf
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
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