The NASD has fined the former Quick & Reilly, now a member of the Banc of America Investment Services family, $570,000 for directed-brokerage violations. In addition, the brokerage industry's self-regulator imposed a $275,000 fine on Piper Jaffray & Co. for similar abuses. The Piper Jaffray fine was adjusted to reflect the firm's voluntary disclosure of its wrongdoing, which was uncovered during a self-evaluation.
According to NASD officials, both firms operated "preferred partner" or "shelf space" programs, a practice where brokers will offer favorable treatment to the funds of certain mutual fund companies in return for commissions and other payments. That treatment, the NASD detailed in a statement, included higher visibility on the firms' internal Web sites, increased access to the firms' sales forces, participation in "top producer" or training meetings, and promotion of funds on a broader basis than was available for other funds.