The NASD on Monday [December 19] fined Merrill Lynch (MER) and Wells Fargo (WFC) a total of $17 million for steering investors into inappropriate shares of mutual funds.
Merrill was fined $14 million and Wells Fargo was fined $3 million. The NASD also fined a third investment firm, Linsco/Private Ledger Corp., $2.4 million, for selling shares that were not suitable for investors.
The firms recommended class B or C shares, or both, without disclosing that class A shares “would generally have been more advantageous” to investors “in view of all relevant considerations,” the NASD said.
Class A shares often carry front-end, or sales charges, that B and C shares typically do not. But B and C shares normally impose asset-based sales or redemption charges that may be higher than charges associated with A shares.