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Jeff Spill, deputy director in charge of enforcement. "What we found instead was a pervasive effort within the company to sell cookie cutter plans heavily laden with American Express mutual funds, without disclosing to clients how this behavior financially benefited the company and its agents."
The state discovered the situation through the course of branch audits, during which Jonas Cutler, staff attorney and lead counsel for the investigation, noticed that accounts were consistently loaded with AEFA funds. Cutler also discovered e-mails that pressured agents to sell AEFA funds, even though these funds often underperformed other available products.
AEFA has also agreed to retain an independent consultant to review its practices regarding the sale of proprietary mutual funds and the use of model portfolios. The consultant will also look at the company's training related to the issue and help determine the amount of restitution that will go to state investors.