The NASD fined two Fidelity Investments broker/dealers-Fidelity Investments Institutional Services Co. and Fidelity Distributors Corp.-$400,000 for distributing misleading performance information about investment plans sold primarily to military personnel.

The Fidelity Destiny I and II systematic investment plans, which require investors to make a fixed number of monthly payments over a 10- to 15-year period, "were sold using various performance charts and data that presented a misleading picture of the plans' performance," explained James S. Shorris, executive vice president and head of enforcement at the NASD. "These failures were aggravated by the fact that the plans were sold primarily to military personnel, who often have limited time to study the marketing materials for investment products."

Specifically, the NASD said that between May 2003 and January 2006, the B/Ds distributed sales literature containing "mountain charts" showing the two funds significantly outperforming the S&P 500 Index over a 30-year period to mask the fact that they underperformed the index in the most recent 10- and 15-year timeframes.

The B/Ds also showed the performance of a share class not available to the investors, rather than the higher-cost share class available to them. Finally, the B/Ds distributed a newsletter to investors in May 2003 that showed the performance of the Destiny I plan without including the impact of a 50% sales charge on the first year's payments and a continuing sales charge.

(c) 2007 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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