Radnor, Pennsylvania based Hartford Investment Financial Services, LLC and Berwyn, Pennsylvania based Hartford Life Distributors, LLC now known as Forethought Distributors, LLC submitted a Letter of Acceptance, Waiver and Consent in which the firms were censured, fined $100,000 jointly and severally, and consented to the entry of Financial Industry Regulatory Authority (FINRA) findings that Hartford Life prepared and distributed numerous copies of a brochure called Staying Ahead of the Curve that discussed features of the Hartford Floating Rate Fund (HFRF) mutual fund, which were unwarranted and misleading in light of changing conditions in the bank loan market. The brochure was provided to selling broker-dealers for use in the marketing and sale of HFRF to their customers. The brochure was approved by Hartford Investment, the Chief Investment Advisor to HFRF.
In particular, the brochure contained misleading statements regarding HFRF's appropriateness for bond investors concerned about the price stability of their investments, the potential for greater price stability compared with other fixed income investments, and suitability for investors seeking some degree of capital preservation. Given the conditions in the bank loan market during the relevant period, these statements were not accurate. The findings also stated that between the time when Hartford Investment became aware of conditions that rendered the statements inaccurate and removed the statements on a later date, it approved the brochure at least twice. Consequently, during this period, Hartford Life distributed approximately 2,450 copies of the brochure. FINRA further included that although concerns regarding the bank loan market and HFRF were reported to the mutual fund's board, none of Hartford Investment's employees responsible for approving HFRF's advertising materials participated in the meetings where these concerns were discussed.
FINRA also found that both firms' written supervisory procedures also lacked any mechanism for ensuring that those responsible for drafting or reviewing advertising materials would be informed of material facts concerning relevant conditions in the bank loan market or HFRF's performance. As a consequence, Hartford Investment approved, and Hartford Life continued to distribute, thousands of copies of the brochure that contained unwarranted and misleading statements.
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