Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Industry Spotlight > Broker Dealers

Evergreen Unit Faces NASD Enforcement Action

Your article was successfully shared with the contacts you provided.

The National Association of Securities Dealers may initiate an enforcement action against a unit of Evergreen Investments for allegedly favoring certain brokers.

Evergreen said on Wednesday that the NASD’s staff has “preliminarily determined” to recommend that action be taken against Evergreen Investment Services Inc. The mutual fund company made the announcement in a statement by chief executive officer Dennis Ferro that was posted on its Web site.

Evergreen, a unit of Wachovia Corp. (WB), said regulators allege that Evergreen Investments directed trades to certain brokers and provided non-cash compensation to brokers associated with Wachovia Securities LLC, Wachovia’s retail brokerage arm, between January 2001 and December 2003.

The compensation was in the form of invitations to attend off-site training meetings hosted by Evergreen Investments for brokers associated with Wachovia Securities, the fund company said.

Evergreen said its unit ended directed brokerages in November 2003. The company also said it does not believe it has violated any laws or rules. Evergreen said it plans to discuss the recommendation with the NASD staff and will cooperate with the agency.

Evergreen said that during the period when it engaged in directed brokerage, “it was a fairly common industry practice to consider the sale of mutual fund shares in selecting a broker-dealer to execute portfolio trades.”

The training meetings were “designed to educate brokers about various Evergreen funds,” Evergreen added.

Evergreen spokesman Dan Flaherty said the company still holds training programs for brokers who sell its funds. Evergreen believes the program “meets all compliance guidelines and requirements and eliminates possible conflicts of interest currently,” he said. The program has changed over time, Flaherty added, but he declined to elaborate.

An NASD spokesman declined to comment on Evergreen’s statement.

Evergreen has said it is also cooperating with a Securities and Exchange Commission probe of alleged improper trading in the company’s has more mutual fund news from Standard & Poor’s available here.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.