Cambridge Investment Research Customers Who Bought Mutual Funds Charged “Unnecessary” Fees, FINRA Concludes
Posted on Nov 18th, 2016 to Cambridge Investment Research, Common Misconduct, Investment Firms, Overcharging Accounts
Mr. Robert (“Bob”) M. Lyons of August, Georgia recently entered into a settlement agreement with the Financial Industry Regulatory Authority for conduct that led to customers paying unnecessary fees while Mr. Lyons worked for Cambridge Investment Research.
The alleged misconduct revolves around the improper sale of mutual funds. When an investor invests in a mutual fund, he or she usually has a variety of mutual fund share classes to choose from: class A shares; class B shares; class C shares; and even class T shares. The primary difference between these types of shares is how investors are charged. Generally speaking, A shares and T shares have big single charge fees, but low recurring fees, so they are only a good deal for long-term investors. They are designed to be bought and then held for a long time.
Financial advisors like to sell A shares and T shares because they can quickly generate large commissions. As long as investors hold these shares for a long time, there’s really nothing wrong with that. The problem arises when a financial advisor sells A shares or T shares, then shortly thereafter recommends that the investor sell his newly acquired shares and buy new A shares or T shares. With this move, a financial advisor can rake in large commissions, but the investor loses out by paying excessive fees. In the world of securities lawyers, this behavior is called “switching”.
According to his settlement agreement with FINRA, Mr. Lyons of Cambridge Investment Research engaged in “switching” for at least three different customer accounts. The accounts were held by long-term investors, but Mr. Lyons kept selling and then buying new A shares or T shares without any reasonable basis for doing so.
Mr. Lyons is no longer working for Cambridge Investment Research, but according to records held at securities regulators, it appears that he is still active in the investment advisory industry, working for Investors Asset Management.
If you have questions about investment losses, the securities litigation attorneys at Investor Defense Law LLP may be able to help, and offer free consultations. Investor Defense Law LLP is a law firm dedicated to helping investors in California, Georgia, and Washington State recover investment losses. We understand investment fraud and know how to sue investment advisors, brokerage firms, and financial advisors. To learn more, contact an investment fraud attorney at 800.487.4660.