Evergreen Investments is facing consequences for the inappropriate rewards the firm gave to financial advisers who sold Evergreen products, Boston Herald reports.
National Association of Securities Dealers inspectors informed Evergreen that enforcement action is going to be recommended against it. NASD found that between 2001 and 2003, Evergreen increased its brokerage business for those investment banking firms that sold a greater percentage of its mutual funds. In addition, Evergreen treated financial advisers who sold a great deal of its funds to offsite training programs. in "offsite" locations. When asked, Evergreen could not specify if the programs were held locally, or in another, more attractive location.
Evergreen CEO Dennis H. Ferro sent a letter to all of the firm's mutual fund investors, informing them of the possible sanctions, while defending the firm. "Evergreen did not believe at the time that it was violating any laws or rules by engaging in these practices. The rules governing these practices were subject to interpretation," Ferro said.
Ferro said that giving brokerage business to those who sell a lot of mutual funds was "a fairly common industry practice" in 2003, but that it has since been discontinued.
As far as the offsite training programs are concerned, Evergreen claims that there was no reward hidden behind it, and that it was just a way to educate brokers.