The NASD has reached a settlement with Waddell & Reed over allegations that the Shawnee Mission, Kan.-based money manager profited by illegally switching the variable annuities of more than 5,000 customers.
Under the terms of the settlement, 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.
The NASD alledges that Waddell & Reed undertook a campaign between January 2001 and August 2002 to switch customers from variable annuity contracts issued by United Investors Life Insurance to similar annuities provided by Nationwide Insurance.
As part of the settlement, former president Robert Hechler and former national sales manager Robert Williams will each pay $150,000 fines and serve six-month industry suspensions.