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Targeted Examination Letter on Unit Investment Trust Rollover Review

September 2016

FINRA is conducting an inquiry with respect to Unit Investment Trust (“UIT”) rollovers. In connection with our inquiry, we request that the firm provide the following documents and information for the period from January 1, 2014 through June 30, 2016 (the “Review Period”) to FINRA by no later than October 10, 2016.

  1. The firm’s Written Supervisory Procedures (“WSPs”) with respect to UITs in effect during the Review Period.
  2. A list and description of exception reports used to surveil UIT activity during the Review Period;
  3. For purposes of this request, an Early Rollover is defined as the sale of a UIT 100 days or more prior to the portfolio ending date. Provide lists of the firm’s top 25 registered representatives for each of the following criteria during the Review Period:
    1. generated the highest Early Rollover revenue; and
    2. had the highest number of Early Rollovers.
    In the lists include the registered representatives’: (a) names, (b) locations, (c) Early Rollover revenue, (c) total UIT revenue, (d) number of Early Rollovers, and (e) total number of UIT rollovers. 
  4. For the top ten registered representatives identified in response to question 3a and 3b, please provide a Purchase and Sales Blotter and Customer Account List for the Review Period. 

This inquiry should not be construed as an indication that FINRA or its staff has determined that any violations of federal securities laws or FINRA, NASD, NYSE, or MSRB rules have occurred.  

Electronic communications must be produced in their entirety in their native, electronic format including attachments, Internet headers, and/or other metadata, on CD-ROM, DVD, or other electronic storage media. Facsimile reproductions such as TIFF, JPG, or other image files, PDF files, or productions that require proprietary software or viewers, including Concordance or Summation, are not acceptable. Please provide a separate file or series of files for each individual (custodian) and/or system produced and include an index clearly indicating the custodian, all e-mail accounts or aliases used or potentially used by the custodian, and the system and/or application from which the electronic communications are being produced. Do not produce paper copies unless there is no electronic source for the electronic communications. Retain all backups or archives of electronic communications for the Relevant Period, even after all responsive electronic communications have been produced.

In responding to this request please note the following:

  • As used in this request, the term “document” means writings, drawings, graphs, charts, spreadsheets, photographs, microfilm, microfiche and any other data compilation or communication from which information can be obtained. “Document” specifically includes, without limitation, communications memorialized or stored in any storage medium, including mechanical or electronic form such as e-mail and voicemail messages. “Document” also includes drafts and any non-identical copies. If any document responsive to this request consists of electronic data, please produce it on CD-ROM, DVD, or other electronic storage media in the native, electronic format as created and stored in the ordinary course of business. Facsimile reproductions such as TIFF, JPG, or other image files, PDF files, or productions that require proprietary software or viewers, including Concordance or Summation, are not acceptable unless that is how the records are kept in the ordinary course of business. See below for information concerning encryption requirements. 
  • If the Firm is providing the information in response to this request electronically on a portable media device (PMD), including but not limited to, hard drives, CD-ROMs, DVDs or other discs/diskettes, the PMD (or the files stored on the PMD) must be encrypted as required by Rule 8210(g) (see Regulatory Notice 10-59). The access password must be provided in a separate communication to me.
  • If the document production contains Bank Secrecy Act materials, please provide those materials in a separate production and under a separate cover letter indicating that the production includes confidential BSA information. All portable media devices must be encrypted and labeled “Confidential BSA Material.”
  • As a matter of policy, FINRA conducts its investigations on a non-public basis. Nonetheless FINRA may sometimes provide access to its investigative files to other regulatory and law enforcement authorities, and, if subpoenaed, to litigants in civil actions. In addition, pursuant to FINRA’s Code of Procedure, FINRA is required to produce documents and transcripts to respondents during discovery. We will not (1) entertain requests for confidential treatment of any information or documents the Firm provides in response to this request; (2) give the Firm notice of any subpoena or access request we receive that encompasses any such information or documents; or (3) undertake to return documents when this investigation is completed.