NASD fines 3 firms for fund sales

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Dec 19, 2005 10:37 pm

Since the article does not mention EJ being fined, I’m sure the NASD findings were baseless. I mean how is it possible that so many inappropriate trades could be allowed? Very perplexing indeed.

No koolaid, just calling it like you all post it.

Merry Chanukwanza!



NASD announced today it has fined Merrill Lynch, Pierce, Fenner & Smith, Wells Fargo Investments and Linsco/Private Ledger Corporation a total of $19.4 million for suitability and supervisory violations relating primarily to sales of Class B mutual fund shares as well as some Class C mutual fund shares. These cases are part of NASD’s continuing investigation into mutual funds sales practices.

Merrill Lynch was fined $14 million, while Wells Fargo was fined $3 million and Linsco was fined $2.4 million. The amount of the fines approximate the additional commissions the firms received by selling Class B shares rather than Class A mutual fund shares. In addition, each firm is implementing a remediation plan to compensate affected customers - collectively involving more than 29,000 households and nearly 140,000 transactions.

NASD’s investigation examined transactions during an 18-month period between January 2002 and July 2003. Investigators focused on 23,000 households at Merrill Lynch with 105,000 Class B and C share transactions; 4,500 households at Wells Fargo with 12,000 Class B and C share trades; and approximately 2,000 households with 22,400 Class B and C share trades at Linsco.

During this period, the three firms recommended and sold Class B and/or Class C share mutual funds to their customers without considering or adequately disclosing on a consistent basis that an equal investment in Class A shares would generally have been more advantageous to those customers in view of all relevant considerations. Before recommending a share class, brokers must consider the customer’s anticipated holding period and all costs associated with each share class including front-end sales charges, annual expenses and contingent deferred sales charges. The firms also had inadequate supervisory and compliance procedures relating to the manner in which the firms’ sales personnel recommended and sold Class B and Class C shares.

Dec 20, 2005 11:18 am

JD - no excuses - I am with one of the mentioned firms and can tell you we made mistakes and fixed them.  Unlike you IRs at Jones we can do that and not toe the line like you guys do.  Did you call it like you see it when you all were hit for $75 million?  Did you call it like you see it when your firm was fined or settled for sales practices that provided it's sales force with wild incentives to sell particular fund families v others?

To be fair and consistent, I hope so.

Dec 20, 2005 6:27 pm

I am at one of the above firms also.  The fine was deserved and paid.  I think it is funny that Jones is getting slammed on half a dozen other threads and not one kool-aider has tried to defend the church…I mean firm.  Yet an artlicle on some other firms getting fined and one dares poke his head up and take a shot…go back to your hole before we send the artillery.

Dec 20, 2005 10:13 pm

Hole? You’re funny.

Edward Jones deserved everyone of those fines and pay the $75 million settlement. Hill deserved to be kicked out. Edward Jones is run by GPs who only look out for #1 - themselves.

That being said, don’t give me the high and mighty speech that no ones else’s sh!t doesn’t stink. You just need to know which holes to look into.


Dec 21, 2005 12:35 am

[quote=joedog]Hole? You're funny.

Edward Jones deserved everyone of those fines and pay the $75 million settlement. Hill deserved to be kicked out. Edward Jones is run by GPs who only look out for #1 - themselves.

That being said, don't give me the high and mighty speech that no ones else's sh!t doesn't stink. You just need to know which holes to look into.





The FACTS, are ALL or MOST of the FIRMS are getting hit, and they should, the difference is at Edward Jones they never admit any wrong doing, as you said the GP's are the Rulers, they have still not admitted wrong doing, have they?

You just said it above, and that speaks volumes for you, but your fellow Edward Jones IR's do not?

JoeDog, your fellow IR's on here defend Jones as if they never did a thing wrong.............Except for you, way to stand-up and take the hit.........we know one Jones IR that has balls, and is honest........way to go....JoeDog. 

Edward Jones was a GREAT FIRM, that Greedy Pricks(GP's) brought down.  I was there for a long time, until I wised up and left, but I have a lot of friends still there, and they are good honest hard working IR's who don't like whats been happening at the home office level, especially the lack of honesty and direct acceptance of responsibility by the GP's.......... 

Since we have an honest Jonser on here what has the Firm told you IR's about the California Problem?  My local IR's have said the Firm is not saying anything, except they have done nothing wrong, sounds exactly like last time with the SEC.............we all know how that turned out.

I have only heard from X-IR's in CA, and they have a biased opinion since they are no longer with Jones and they have given statements to CA State Attorney General.  

Dec 21, 2005 8:47 am

JDog - good to see you make that stand.

Dec 21, 2005 9:32 am

Boy, that’s something. Player’s telling ME to lighten up. I always get this way during the holidays.

The GP$ will have a tremendous holiday while those that toil in the fields get a kick in the nutz. Its the same everywhere folks - some firms execute the charade better than others.

Here’s to fighting the California AG “vigorously”; we must fight to protect the GP$ capital, you know.


Dec 21, 2005 10:56 am

JD - it's not the same everywhere I can swear to it.  I've been and know many at different places; it is not the same everywhere!

Have a great holiday.