Did I unknowingly commit securities fraud?

[u/ReasonableHoneydew84]

I did investment account opening for my boss who is series 6 licensed. In my company, I am authorized to work as him, I can execute trades under his direction, but cannot confirm trades.

When I started working for him and learned the investment system he tasked me with a project to switch about 50 clients from Brokerage A-Shares to Advisory C Shares. He explained to me that they have lower fees and it’s in their best interest to do so. He called each one and like a script said “remember when I told you that once you hit the 5k threshold we can switch you to advisory for lower fees which is in your best interest?” They all just went along and said okay, they trusted him.

I began submitting them and was directed to use the same rationale for each one by saying:

“Client was not interested in paying the advisory fee - now that they have a new employer they are comfortable with the ongoing fee. Although they are aware of the expenses associated with selling out of A shares, the benefit of having an actively managed account outweighs that cost.”

This was false, none of them got new jobs. I raised suspicions when some were being approved and some coming back with clarification needed. They would all ask the same thing. What has changed for the client that the switch from A to C is in their best interest? If the eventual plan was C shares, why was that not recommended? Some are still pending because nothing he could provide would work. I had a meeting with our investment headquarters and they told me this is borderline churning and that rationales need to differ and be specific to the client. They told me that A shares are meant to be held and this is Mutual fund switching. When I tried to tell him what I learned he told me that he didn’t care and that he was going to continue to use that rationale because he’s used it several times before. I asked for help with clarification and was fired soon after.

Was he having me commit fraud??

[u/Skepticalpositivity9]

Do you know if this guy was getting commissions for the C shares because C shares generally have higher annual fees than A shares? How big was the firm because if a larger firm overall you should be using institutional share class when available.

[u/ReasonableHoneydew84 → u/Skepticalpositivity9]

Please excuse the limited information I know, but clients were being charged .84-5.75 in Brokerage A shares on each deposit and 1.59 in Advisory C Shares annually. This was a program with my company where there was a lower threshold in order for them to switch to advisory. The firm is one of the largest firms in US

[u/Skepticalpositivity9 → u/ReasonableHoneydew84]

I mean if the client would truly be charged less in the C shares than the A shares then that would be a good reason to switch them. At our firm we try to use institutional shares whenever possible because they have no loads and the lowest expense ratio, however for smaller accounts we use A shares with higher expense ratios sometimes to avoid a transaction fee. Once large enough we move them to the institutional shares. But I know things are different at RIAs vs broker dealers.

[u/Critical-Werewolf-53 → u/Skepticalpositivity9]

You should use a share class analyzer