NU Online News Service, May 20, 2004, 2:43 p.m. EDT – NASD, Washington, has fined 3 securities firms in connection with allegations of problems with variable products operations.[@@]
The self-regulatory group also has fined 1 broker and barred 2 brokers from the securities industry.
None of the companies or individuals involved in the settlements has either admitted or denied the allegations, NASD says.
In the enforcement actions against individual brokers, NASD says it barred one for converting funds from a variable annuity and a second for forgery and misrepresentation in connection with variable annuity sales. NASD fined a third broker $28,000 and suspended him for 6 months for unsuitable sales of deferred variable annuities.
The enforcement actions against companies involved American Express Financial Advisors Inc., a unit of American Express Company, New York, and Nationwide Investment Services Corp. and Nationwide Securities Inc., which are both units of Nationwide Financial Services Inc., Columbus, Ohio.
NASD imposed a $300,000 fine on AEFA “for inadequate record-keeping during a 4-year period, which was discovered as a result of an investigation into unauthorized withdrawals from a customer’s variable annuity account,” NASD says.
An AEFA representative who converted a customer’s funds avoided detection for almost 2.5 years because he had changed the customer’s address on the AEFA records to the representative’s own address, NASD says.
David Kanihan, an American Express spokesman, emphasizes that the fine resulted only from the allegation that the AEFA failed to keep the records that NASD sought in a “non-rewriteable, non-erasable” format between December 1998 and November 2002.
“The fine has solely to do with the format in which the records were stored,” Kanihan says.