T. ROWE PRICE INVESTMENT SECURITIES, INC. CENSURED AND FINED FOR FAULTY MUTUAL FUND PROSPECTUSES

T. Rowe Price Investment Securities, Inc., a Baltimore, Maryland based brokerage firm, submitted a letter of acceptance, waiver, and consent after the Financial Industry Regulatory Authority (FINRA) entered findings alleging that it failed to deliver prospectuses to mutual fund customers within three business days of their purchases. FINRA stated that the firm's clearing firm contracted with a third-party service provider for the delivery of mutual fund prospectuses for some of the clearing firm's introducing brokers, including the firm. On a daily basis, the clearing firm provided the service provider with electronic information regarding mutual fund transactions requiring delivery of a prospectus to the firm's customers. The clearing firm also provided daily and monthly reports to the firm. The firm did not establish or implement adequate systems or procedures for review of the daily reports. Although the firm's procedures required review of the monthly reports, they did not adequately describe what the reviewer was required to look for or what actions the reviewer was required to take in the event that prospectus delivery deficiencies were identified. FINRA further stated that the firm did not take sufficient actions to ensure that all of its customers were receiving prospectuses on time. In addition, FINRA stated that because of the firm's failure to timely deliver prospectuses to certain customers who purchased mutual funds, these customers were not provided with important disclosures about these products by settlement date in contravention of the Securities Act. The firm was censured and fined a total of $40,000 for all violations.
A prospectus is a document that discloses important information about an investment. It typically provides investors with material information about mutual funds, stocks, bonds, and other investments. Such information generally includes a description of the company's business, financial statements, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties, and any other material information.
T. Rowe Price Investment Securities was required to establish and maintain a supervisory system and written supervisory procedures (WSPs) reasonably designed to monitor and ensure the timely delivery of mutual fund prospectuses. FINRA found that the firm's WSPs did not require an adequate review of the service provider's performance of its prospectus deliveries. Instead, the firm's system for supervising the timely delivery of mutual fund prospectuses involved substantial reliance on the clearing firm and the service provider. FINRA concluded that the firm lacked an adequate supervisory system or procedure that was reasonably designed to ensure that mutual fund prospectuses were being delivered on a timely basis consistent with the Securities Act, and failed to implement and maintain such a supervisory system and WSPs.
Have you suffered losses in your T. Rowe Price Investment Securities brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against T. Rowe Price Investment Securities stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

T. ROWE PRICE FINED FOR FAILURE TO DELIVER PROSPECTUSES TO INVESTORS

T. Rowe Price Investment Services, Inc. (T. Rowe Price) has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. T. Rowe Price failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that T. Rowe Price failed to provide prospectuses to its customers who purchased mutual funds and other securities products during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that T. Rowe Price may have failed to deliver at least 2,500 prospectuses to its customers in a timely manner during that period.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and can intelligently appraise the risks involved in his or her particular investment. Not only has T. Rowe Price violated the Section 5 of the Securities Act, but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time a prospectus must be delivered. A prospectus is required to be delivered by securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund transactions and most stock transactions is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulator such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through T. Rowe Price if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from a T. Rowe Price stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.