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Investors nationwide might be eligible for a refund of the front-end sales charge they paid when they purchased Class A shares of a mutual fund from their respective securities firms. An industry-wide survey taken showed that investors did not receive discounts in one out of every five transactions that were eligible for discounts. Front-end sales discounts are offered to customers who are making large mutual fund investments - usually between $25,000.00 and $50,000.00. The Financial Industry Regulatory Authority (FINRA) is expecting firms to make refunds to their customers where they are aware that their customers did not receive a discount to which they were entitled. In addition, FINRA is expecting firms to make refunds when clients come forward and show that they did not receive all applicable discounts.

Mutual funds typically offer more than one "class" of shares to investors. Each class represents the same interest in the mutual fund, but the sales charges, fees, and expenses will vary. For example, Class A shares require investors to pay a front-end sales charge or "load" that is deducted from the initial investment amount - a 5% front-end sales load at a cost of $1,000 will generate a $50 sales load with $950 remaining invested in the mutual fund. Investors may qualify for a breakpoint discounts in a number of ways: 1) the amount invested exceeds a breakpoint threshold; 2) a letter of intent is written stating that the customer will invest an amount greater than a break-point threshold within a specified time established by the fund; and 3) having rights of accumulation, which allow customers to combine future purchases with earlier ones to exceed a break-point threshold. Each mutual fund family sets its own breakpoint discounts and sets the rules regarding which accounts will count towards breakpoint discounts.

Securities firms must make a refund if an investor has a valid claim that he or she was overcharged. In fact, many firms have already begun to refund excessive front-end sales load charges to their customers. FINRA is directing more than 450 securities firms to notify customers who purchased Class A mutual fund shares since 1999 that they may be due discounts resulting from their respective firms' failure to provide breakpoint discounts. FINRA is also requiring nearly 175 of those firms with poor records of providing breakpoint discounts to complete a comprehensive review of transactions since 2001 for possible missed discount opportunities.

Do you believe you are entitled to breakpoint discounts, but have not yet received a refund? 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,, post a comment, call (800) 732-2889, or email Mr. Pearce at for answers to any of your questions about this blog post and/or any related matter.