The
JPVC is paying a fine of $325,000 to the NASD for this action and $238,697 in restitution to the affected funds. Furthermore,
Jefferson Pilot has already paid $119,024 in restitution to the JPVF International Equity Portfolio and will pay $66,191 to the American Century Variable Products, Inc. VP International Fund and $53,482 to the Franklin Templeton Variable Insurance Products Trust Templeton Foreign Securities Fund.
The companies neither admit to nor deny the charges but have consented to the entry of the NASD's findings.
"Jefferson Pilot's failure to conduct a meaningful review of its supervisory systems resulted in the impermissible market timing and excessive trading, which in turn resulted in harm to other policy holders with assets in these sub-accounts," said Mary L. Schapiro, vice chairman of the NASD.
Although Jefferson Pilot had a system in place that was designed to detect block sub-account transfers that exceeded policy limits, the company failed to make sure that system was working. Because of this lapse, 292 Ensemble policyholders were able to execute more than 20 annual trades.
In 2003, two policyholders engaged in market timing, executing 116 trades beyond the contractual limit. These activities resulted in gains of $238,697. Between Jan. 1, 2001, and the end of 2003, at least 292 policyholders were in an asset-rebalancing program that exceeded contractual trading limits.