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Money Management Executive

NASD Fines Three Firms, One Broker for VA Sales

May 24, 2004, 1:00 a.m. EDT 1 Min Read

The National Association of Securities Dealers has fined three securities firms and one broker $503,000 for inadequate variable annuity sales procedures and marketing materials, as well as faulty VA recordkeeping systems.

Nationwide Investment Services Corp. and its affiliate Nationwide Securities were fined a total of $175,000 for inadequate sales practices and marketing materials, while American Express Financial Advisors was fined $300,000 for inadequate VA recordkeeping. NASD discovered Amex’s faulty records after an investigation into unauthorized withdrawals from an investor’s variable annuity account. NASD fined broker Michael H. Tew, a former employee of A.G. Edwards & Sons, $28,000 for selling three unsuitable deferred variable annuities. Tew has also been suspended from selling for six months.

In addition, two other brokers have been barred from working with any NASD member for forging customers’ names on VA accounts. They are Daniel Karl Park, formerly with Northwestern Mutual Investment Services, and Debora Fruge, formerly with Banc One Securities Corp.

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