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FINRA to Firms: Self-Report 529 Savings Plan Violations

January 28, 2019

by Howard Haykin


Fines to be waived for firms notifying FINRA by April 1 - an initiative that stresses restitution and rapid remediation


FINRA is giving member firms a 2-month window to self-assess their supervisory systems and procedures governing 529 plan share-class recommendations, to self-report and correct any supervisory violations, and to initiate a plan for remediating harmed customers. FINRA's action is based on a concern that some firms may not provide supervision reasonably designed to ensure that representatives recommend a 529 plan share class that is tailored to the unique circumstances and needs of each customer.


529 plans are tax-advantaged municipal securities that are designed to encourage saving for the future educational expenses of a designated beneficiary, and shares are commonly sold in different classes with fees and expenses that vary widely from plan to plan.


The 529 Initiative is the latest in a series of developments from FINRA to provide firms with information to assist them in fulfilling their compliance obligations. Recently, FINRA published its Report on 2018 FINRA Examination Findings to provide a resource firms can use to improve their compliance and supervisory programs. In addition, FINRA publishes an annual Risk Monitoring and Examination Priorities Letter to highlight issues of importance to FINRA's regulatory programs.



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