FINRA Orders American Portfolios to Pay $1.6 Million Over Unit Investment Trust Supervision Failures
From the desk of Jim Eccleston at Eccleston Law
The Financial Industry Regulatory Authority (FINRA) has ordered American Portfolios, the broker-dealer later absorbed into Osaic, to pay more than $1.6 million in restitution and fines over failures to supervise financial advisors who repeatedly recommended that customers sell unit investment trusts (UITs) before maturity.
The settlement includes $1,232,939 in restitution, plus interest, to nearly 300 customers and a $400,000 fine. FINRA disclosed the resolution in a FINRA Acceptance, Waiver and Consent (AWC) letter dated August 31, 2026.
According to InvestmentNews, the case adds to a broader series of FINRA enforcement actions involving UIT sales practices. The regulator previously sanctioned firms including Cetera, SagePoint Financial and Stifel over similar concerns.
FINRA found that American Portfolios customers purchased approximately $470 million in UITs between January 2018 and October 2024. During that period, the firm lacked an effective system for identifying representatives who repeatedly recommended early UIT sales.
InvestmentNews reports that FINRA identified three registered representatives whose sales patterns raised concerns. Two representatives who worked as a team recommended early UIT sales in roughly 61 percent of transactions, with customers holding the products for only about half of their stated terms on average. A third representative recommended early sales in approximately 78 percent of transactions.
American Portfolios did not implement a system to flag early UIT sales until October 2018. Even then, its trade alerts applied only to UIT transactions exceeding $1,000 in principal value and did not tell reviewers how close the products were to maturity when customers sold them, according to InvestmentNews.
That gap prevented supervisors from readily identifying patterns in which representatives repeatedly recommended early sales and reinvestment into new UITs that carried additional sales charges.
According to InvestmentNews, American Portfolios operated for decades in the independent broker-dealer channel before Advisor Group agreed to acquire the firm in 2022. The transaction brought approximately 850 advisors managing nearly $40 billion in client assets into the larger network.
Advisor Group rebranded as Osaic the following year and consolidated eight broker-dealers under the new name and platform. American Portfolios formally merged into Osaic Wealth Inc. in October 2024, InvestmentNews reports.
American Portfolios settled without admitting or denying FINRA's findings.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, finra, american portfolios, unit investment trusts, failure to supervise, broker-dealer regulation
