Regulators accuse First Trust Portfolios of making inappropriate payments to brokers. FINRA, the Financial Industry Regulatory Authority, alleges First Trust gave numerous excessive gifts in connection with securities brokers selling First Trust investments. This all raises concerns as the conflicts of interest on the part of those selling First Trust investments to investors.
Between at least 2018 and at least February 2024, First Trust provided expensive gifts to stockbrokers and financial advisors for selling First Trust investment company securities. Such gifts were in amounts that significantly exceeded FINRA limits, and in certain instances provided non-cash compensation preconditioned on Client Firm representatives achieving sales targets.
During the same period, First Trust falsified records concerning non-cash compensation provided to stockbrokers and financial advisors, and First Trust sent false information concerning the value, nature, and frequency of non-cash compensation provided to the broker employers. Finally, the Firm failed to establish, maintain, and enforce a system reasonably designed to achieve compliance with non-cash compensation rules and expense-related recordkeeping requirements.
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