The NASD has reached a settlement with Waddell & Reed over allegations that the money manager profited heavily from inappropriately switching the variable annuities of more to 5,000 customers.

Under the terms of the settlement with the NASD and a separate agreement with a coalition of state regulatory authorities, Waddell & Reed will repay up to $11 million to customers whose annuities were exchanged by the company. It will pay a fine of $5 million to the NASD and a fine of $2 million to state regulators.

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