Breakpoint Sales
Because breakpoints can be confusing to investors, registered representatives should help their clients understand and take advantage of breakpoints. If the investor can achieve a breakpoint, the representative should advise the investor of this, even if it means the rep’s commission is reduced. When a rep fails to do this, the result is a breakpoint sale. Breakpoint sales are prohibited by the MSRB and FINRA.
Two examples of breakpoint sales are:
• Recommending that a customer invest in two separate but almost identical municipal fund securities to avoid a reduced commission
Example: Mary has $25,000 to invest in a 529 plan. Peter, a registered representative, advises her to invest $20,000 now in her state’s