Financial Industry Regulatory Authority orders American Portfolios Financial Services to pay USD 4.6 million restitution over bank deposit program fee disclosures and undisclosed surplus interest

The Financial Industry Regulatory Authority ordered American Portfolios Financial Services, Inc. (APFS) to pay USD 4.6 million in restitution to customers affected by inaccurate disclosures about how bank deposit program fees were calculated and by the firm’s retention of undisclosed surplus interest earned on customers’ funds. FINRA also imposed a USD 550,000 fine. Between April 2018 and September 2022, APFS enrolled about 85,000 customers in its bank deposit program and disclosed that per-account fees were tied to the Federal Funds Target rate, but it instead set customer yields based on factors such as competitors’ rates and retained the remaining interest paid by participating banks, net of other administrative fees. FINRA found APFS collected more than USD 3 million in aggregate fees above what the disclosed formula would have produced, failed to disclose retention of approximately USD 1.25 million in surplus interest when interest rate changes created excess proceeds, and incorrectly treated retained excess administrative fees and surplus interest as revenue in its net capital calculation, resulting in inaccurate monthly reports to FINRA. FINRA also found supervisory failures from April 2018 to May 2023, including the absence of written procedures reasonably designed to ensure disclosures communicated all material information and that fees were calculated in line with customer disclosures. APFS, acquired by Osaic Holdings, Inc. in November 2022 and merged into Osaic Wealth, Inc. in October 2024, settled without admitting or denying the charges.