The Securities and Exchange Commission announced that 1st Global Capital Corp., a Dallas-based broker-dealer, will pay a $100,000 penalty and consent to findings that it made unsuitable recommendations and sales of Section 529 College Savings Plans.According to the order, between 2001 and 2004 1st Global recommended and sold investments in 529 plan units without understanding and evaluating the comparative costs for its customers.
In a statement, the director of the SEC's Division of Enforcement, Linda Chatman Thomsen, said that the case demonstrates agency’s continuing attention to the 529 area.
The order provides illustrations of the effects of comparative 529 plan unit costs over an anticipated lengthy holding period. For example, one 1st Global customer invested $11,000 each for five-month-old twins in Class C units of a popular 529 plan investment. If the customer had purchased Class A units in the same investment, their investment for each child would be worth an estimated $4,100, or 9 percent, more than the value of Class C units when the children reach college age, assuming 10 percent growth. The order also gives illustrations of the effects of unique 529 plan cost structures on comparative unit costs.
1st Global consented to the entry of the order without admitting, or denying, the SEC’s findings.
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