The National Association of Securities Dealers has imposed $34 million in fines on broker-dealers for directing customers to mutual funds that paid the broker-dealers extra commissions.[@@]
The NASD, Washington, says charging fund companies for “shelf space” or “preferred partner” status violates broker-dealers’ obligations to customers.
“When recommending mutual fund investments, funds must act on the basis of the merits of the funds and the investment objectives of the customers and not because of other benefits the brokerage firm will receive,” NASD Vice Chairman Mary Schapiro says in a statement about the fines.
Many of the 15 broker-dealers that received the fines are affiliates of American International Group Inc., New York, or AXA S.A., Paris.
At AXA, AllianceBernstein Investment Research and Management Inc., New York, is paying a fine of about $4 million; AXA Advisors L.L.C., New York, is paying a $900,000 fine; and Advest Inc., Hartford, is paying a $286,415 fine.