Six B/Ds in Breakpoint Deal; To Pay Fines, Reimburse
February 9, 2004
Six financial services companies, including UBS AG and Wachovia Corp., have reportedly agreed to settle SEC allegations that their brokers failed to give promised mutual fund discounts.
The two banking companies are reportedly in talks with regulators, along with American Express Co., Legg Mason Inc., Raymond James Financial Inc., and Linsco/Private Ledger, and had reached an agreement.
A source at one of the companies who declined to be identified said the SEC is not expected to announce the settlement for a couple of weeks.
Customers who buy more than $50,000 of a mutual fund through a broker are often given breakpoint discounts on commissions. The National Association of Securities Dealers has estimated that unnamed brokers failed to give $86 million in discounts during 2001 and 2002. The six companies will reportedly pay fines and reimburse customers who were entitled to these discounts. The NASD is in talks to settle with other companies.
Wachovia said in a November 10-Q filing that it expected to reimburse $5 million to customers. Christine Walton, a spokeswoman at UBS, said the company is in talks with regulators about breakpoints.
"While we have been working to resolve issues," she said, "no settlement has been approved, so it would be premature to make a comment at this time." A Wachovia spokesman said the company has no comment on the report.
A spokesman for American Express said the company disclosed in its November 10-Q filing that it was notified by the SEC and the NASD that they would recommend enforcement actions. "We are working with the SEC and the NASD to resolve the matter and are committed to refunding clients any overcharges that are uncovered," said David Kanihan, the spokesman.
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