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May 02, 2019 at 01:44 PM
FINRA fined AXA Advisors $600,000 and ordered the firm to pay about $172,000 in restitution for distributing materials that negligently misrepresented the holdings of certain bond funds offered for 401(k) plans.
AXA negligently misrepresented to affected 401(k) retirement plan participants that certain bond funds offered for 401(k) plans were “investment-grade” when, in fact, a substantial portion of the funds’ portfolios consisted of high-yield or junk bonds, according to the FINRA letter.
As part of the settlement, FINRA also required AXA to send corrective disclosures to all affected plan participants.
“401(k) plans are among the most important and prevalent retirement savings options available to investors,” Susan Schroeder, FINRA’s executive vice president of enforcement, said in a statement. “Investors need accurate information to make informed decisions about their retirement savings, and member firms play a critical role in providing complete and accurate information to retirement plan sponsors.”
AXA sells and services group annuity contracts for employer-sponsored 401(k) retirement plans that an affiliated life insurance company issues and administers. AXA registered representatives worked with employers to help them determine what funds should be included within the group annuity contracts for 401(k) plans they offered to employees.
FINRA found that from September 2010 through November 2015, AXA distributed documents that negligently misrepresented that five bond funds offered with some of its group annuity contracts were “investment-grade,” when, in fact, a substantial portion of the funds’ portfolios consisted of high-yield or junk bonds.
