Close Close
Sign In
Newsletters
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
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Regulation and Compliance > Federal Regulation > SEC

Company Settles Preferred Fund Program Case

By Staff Writer

X
Your article was successfully shared with the contacts you provided.

The U.S. Securities and Exchange Commission has accepted a sanctions proposal from the broker-dealer arm of a large insurance holding company.

The broker-dealer, IFMG Securities Inc., Purchase, N.Y., is responding to SEC concerns about an old “preferred program” for money managers by agreeing to give up more than $2.8 million in program revenue and interest; pay a $1 million fine to the U.S. Treasury; and hire an independent consultant to come up with recommendations about ways to improve IFMG’s mutual fund and variable insurance product revenue-sharing arrangements and disclosures.

The SEC has described the settlement in an order imposing the sanctions and requiring IFMG to do a better job of disclosing revenue-sharing arrangements.

Representatives for Sun Life were not immediately available to comment on the settlement.

The SEC says IFMG, a unit of Sun Life Financial Inc., Toronto, failed to provide adequate disclosure of a preferred program revenue-sharing system that was in place from January 2000 through November 2003.

The program included 5 mutual fund families and between 6 and 12 manufacturers of variable insurance products, according to the SEC.

The fund companies paid IFMG fees ranging from 0.1% to 0.18% on new sales and between 0.03% and 0.05% on the funds’ assets under management, the SEC says.

Sales of the fund from the preferred families accounted for 87% of IFMG fund sales in 2003, up from 81% in 2000, the SEC says.

The variable insurance product manufacturers paid IFMG 0.1% to 1% on sales of new contracts, with an average payment of 0.5%, the SEC says.

IFMG eventually reduced the commissions it paid to registered representatives for the sale of non-preferred products 33%, the SEC says.

NOT FOR REPRINT

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