NASD fines Merrill, Wells, Linsco over fund shares
WASHINGTON (Reuters) – Brokerage regulator NASD said on
Monday that it imposed fines totaling $19.4 million on three
brokerages — Merrill Lynch, Wells Fargo and Linsco/Private
Ledger Corp. — for what it said were improper sales of Class B
and C mutual fund shares.
Merrill was fined $14 million, while Wells Fargo was fined
$3 million, and Linsco was fined $2.4 million, NASD said.
NASD alleged the brokerages boosted their commissions by
selling Class B shares, rather than more suitable Class A
mutual fund shares, in nearly 140,000 transactions involving
more than 29,000 households.
Each firm is implementing a remediation plan to compensate
affected customers, NASD said.
“In recommending mutual funds with different share classes,
brokers must understand, consider and disclose information
about which particular share class would be most beneficial for
the customer from an expense perspective,” Barry Goldsmith,
NASD head of enforcement, said in a statement.
“The failure by these firms to do this resulted in their
customers purchasing Class B and C shares when they would have
been better served with Class A shares,” he said.