First Command Financial Services, a leading seller of financial products to military personnel, agreed last Wednesday to pay $12 million to settle allegations that it used shady sales practices to pitch mutual funds to thousands of enlisted men and women over the last five years.

The Securities and Exchange Commission and NASD said that First Command failed to disclose to military officers the upfront sales charges on some of its high-cost fund products, many of which imposed sales loads of up to 50% of an investor's first-year contributions. In addition, sellers of the funds were accused of exaggerating the performance track record of these "systematic investment plans" and misled customers about cheaper alternatives while using their military credentials to manipulate soldiers. Fort Worth, Texas-based First Command neither admitted nor denied any wrongdoing but was censured for its actions. "We at First Command look forward to returning our full focus and attention to helping families pursue their financial goals," CEO Lamar C. Smith said. "We believe in the integrity of our company, our agents and the products we sell."

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