NASD Fines Citizens Bank For Annuity, 529 Sales
October 23, 2006
The NASD has fined Citizens Bank's broker/dealer subsidiary, CCO Investment Services, $850,000 for not properly supervising sales of 529 college savings plans and annuities to ensure that the products were suitable for investors. The bank also didn't adequately supervise telemarketing calls to make sure that employees didn't call consumers who had registered their names on federal do-not-call lists, the NASD said. The questionable sales and calls took place between October 2003 and March 2005, according to the NASD.
The self-regulatory body is also requiring the company to improve its e-mail retention practices, ensure that it obtains written consent from prospective new supervisors to review their past records, review the resources it devotes to compliance and properly register its offices. Further, the NASD is requiring Citizens Bank to keep thorough records of compensation to its brokers by issuers of variable contracts and mutual funds.
In settling with the NASD, Citizens Bank neither admitted to nor denied the findings.
"This bank-affiliated firm missed the mark with regard to several important requirements, including some that impacted retirees, an especially vulnerable group for whom the NASD rules, the federal securities laws and the telemarketing laws provide valuable protections," said NASD Executive Vice President and Head of Enforcement James S. Shorris.
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