NASD is probing six large securities firms for their 529 college savings plan sales practices, The Wall Street Journal reports today. Although the article does not name the six firms, and NASD’s Web site makes no mention of the probe, NASD Vice Chairman Mary Schapiro told The Journal that an "overwhelming majority," typically 90%, of 529 plans sold by the six firms are sold to out-of-state residents. The NASD is investigating whether these are appropriate sales, Schapiro said, because nonresident investors "potentially lost one of the great benefits of buying a 529 plan: state tax deductability" of contributions.

The NASD began its investigation into the six firms last summer and is now "looking at expanding the scope of what we are doing beyond these six firms," Schapiro said.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.