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NASD Cracks Down On Broker/Dealers - Again


The NASD announced last Wednesday it has fined 15 broker/dealers more than $34 million in total for directing brokerage in exchange for preferential treatment for certain mutual fund companies.

The broker/dealers violated NASD's Anti-Reciprocal Rule, which prohibits firms from favoring the sale of shares of particular mutual funds on the basis of brokerage commissions. Also, a firm is not allowed to recommend specific funds to sales personnel or to establish preferred lists of funds in exchange for directed brokerage.

"When recommending mutual fund investments, firms must act on the basis of merits of the funds and the investment objectives of the customers and not because of other benefits the brokerage firm will receive," said NASD Vice Chairman Mary L. Schapiro.

The censured broker/dealers include: Royal Alliance Associates, H.D. Vest Investment Services, AllianceBernstein Investment Research and Management, Linsco/Private Ledger, Wells Fargo Investments, SunAmerica Securities, FSC Securities, Securities America, RBC Dain Rauscher, McDonald Investments, AXA Advisors, Sentra Securities, Spelman & Co., Advantage Capital and Advest.

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