The
"We continue to pursue conduct which puts the interests of firms ahead of the interests of customers," said Barry Goldsmith, NASD executive vice president and head of enforcement. "NASD's prohibition on the receipt of directed brokerage is designed to eliminate these conflicts of interest in the sale of mutual funds, whose costs are paid not by the mutual fund company but by the funds' shareholders."
NASD found that the brokers operated "preferred partner" programs that gave the funds higher visibility on their Web sites and increased access to their sales forces, including participation in meetings of top producers.
Four of the companies are subsidiaries of
In addition, the NASD found that for four months in 2002, National Planning Corp. gave its registered representatives double credit for selling funds in its preferred partner program. The regulator also charged Commmonwealth Financial for failing to retain e-mails.