By recommending Class B mutual fund shares when Class A shares "would have been clearly superior," a Morgan Stanley Dean Witter broker violated the Securities Exchange Act, a class-action lawsuit filed last week in Tennessee contends.

The suit, filed by the law firm of Falls & Veach, was filed by investors that took the advice of a Morgan Stanley broker to buy Class B shares when a recommendation of A shares would have suited them better. Saying Morgan Stanley "engaged in fraudulent and deceptive practices...resulting in class members paying excessive fees and/or loads with respect to such shares," the suit says that from February 24, 1998 and forward, "class members must have invested as a result of the recommendation of a MSDW broker.

The lawsuit was filed on May 21 in the United States District Court for the Western District of Tennessee.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.