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.