The NASD last Tuesday fined three MetLife Securities companies $5 million for allowing late trading of mutual funds, providing inaccurate and misleading information to the NASD and failing to produce e-mails in a timely fashion.
The three companies are MetLife Securities, New England Securities and Walnut Street Securities.
The NASD first submitted a request for information on late trading of mutual funds to the three companies in September 2003. The companies said they were not aware of any late-trading transactions and that they had policies and procedures in place to ensure that any order received after 4 p.m. would be executed the following day.
However, in April 2004 the firms' internal auditors uncovered as many as 19,000 potential late trades and, in fact, determined in June 2004 that roughly 800 of them were, indeed, late trades, but the companies didn't disclose this to the NASD until that December.
"NASD relies on firms to respond accurately and promptly to requests for information," said James S. Shorris, executive vice president and head of enforcement at the NASD. "Part of the problem in this case stemmed from the decision by the MetLife firms to respond to a regulatory inquiry by relying upon a committee without clear lines of authority or specifically identified individuals responsible for the adequacy and accuracy of the information that was provided."
(c) 2006 Money Management Executive and SourceMedia, Inc. All Rights Reserved.