Churning abuses by broker/dealers usually involve variable annuities or other insurance products, which is why industry attorneys were surprised when the SEC announced last week that it had fined Dean Witter Reynolds, now part of Morgan Stanley Dean Witter of New York, nearly half a million dollars for failing to prevent mutual fund churning by one of the firm's Atlanta brokers.

Inappropriately switching mutual funds in order to gain sales commissions "is not a common occurrence" among broker/dealers, financial planners or registered investment advisors, said Richard Wessel, the Atlanta district administrator with the SEC who oversaw the case against Dean Witter. Problems with mutual fund sales at the broker/dealer level usually involve share classes, said Amy Hyland, a spokesperson for NASD.

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