Park Avenue Securities LLC (CRD #46173, New York, New York)

Park Avenue Securities LLC (CRD #46173, New York, New York)

September 24, 2024 – An AWC was issued in which the firm was censured and fined $125,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that its supervisory system and WSPs were not reasonably designed to achieve compliance with FINRA Rule 2111 or the Care Obligation of Reg BI as they pertain to mutual fund share class recommendations to retirement plan customers. The findings stated that specifically, where these customers did not qualify for a Class A sales charge waiver from a mutual fund, the firm’s WSPs failed to describe the steps that it should take to evaluate whether  recommendations to purchase Class A shares or Class C shares were in their best interest or suitable for them when they were eligible to purchase Class R shares. In this situation, the firm did not assess whether it would have been better for certain retirement plan customers to purchase Class R shares, and the firm did not provide supervisors with guidance or information necessary to make this assessment. As a result of these supervisory weaknesses, the firm did not reasonably supervise mutual fund share class recommendations to certain retirement plan customers and failed to identify retirement plan customers that purchased Class A or C shares when they were eligible to purchase—and would have benefitted by purchasing—Class R shares. These purchases caused the customers to incur $91,344.52 in either additional operating fees (for those customers who purchased Class C shares) or front-end sales charges (for those customers who purchased Class A shares). The firm has already paid this amount in restitution to these customers. In addition, by failing to establish, maintain, and enforce WSPs reasonably designed to achieve compliance with Reg BI, the firm failed to comply with Reg BI’s Compliance Obligation. Ultimately, the firm revised its supervisory system and its supervision of mutual fund share class recommendations to retirement plan customers. (FINRA Case #2021070875201)