Targeted Examination Letter on Rights of Reinstatement (RoR)

November 2020

FINRA is conducting a review of firms’ systems and procedures for providing customers waivers and rebates available through Rights of Reinstatement¹ (RoR) on mutual fund purchases.

As part of this review, FINRA will request that each firm that receives this information request respond to the questions below with respect to the period January 1, 2017 through June 30, 2020 (the relevant period):

1. Identify whether the firm has systems and procedures in place reasonably designed to provide eligible mutual fund customers with RoR sales charge waivers and/or fee rebates.
2. Describe all such systems and procedures in effect during the relevant period.  Include in this response: (a) all documents relating to the systems and procedures (e.g., written supervisory procedures, policy manuals, job aids, training materials, technical specification/requirements documents for any automated controls, and quality control testing and audit results for any controls); and (b) the time period when the systems and procedures were in effect.
3. If there were any changes to the firm’s systems and procedures relating to RoRs during the relevant period, indicate when each change in policy occurred and the reason(s) for the change. 
4. If the firm has implemented, or is otherwise in the processes of implementing, a policy standardizing the timeframe governing when RoRs apply to purchases of mutual funds offered on its platform, provide the details of the policy and a statement discussing the reason for implementing the policy.
5. Identify whether the firm detected any RoR sales charge waivers or fee rebates (missed RoR waivers) that were not provided to customers purchasing mutual funds.  If so, please provide details of any missed waivers or fees, including the number of customers and the number, and dollar value, of the missed waivers or fees.