Reuters – Brokerages regulator NASD said on Monday it imposed fines totaling $19.4 million on three firms — Merrill Lynch (MER.N: Quote, Profile, Research) , Wells Fargo (WFC.N: Quote, Profile, Research) and Linsco/Private Ledger Corp. — for what it said were improper sales of Class B and C mutual fund shares.
Merrill was fined $14 million, while Wells Fargo was fined $3 million, and Linsco was fined $2.4 million, NASD said.
The regulator alleged that the brokerages boosted their commissions by selling Class B or Class C shares, rather than more suitable Class A mutual fund shares, in nearly 140,000 transactions involving more than 29,000 households.
Each firm is implementing a remediation plan to compensate affected customers, NASD said.
The fines are the latest in a wave of penalties imposed since 2003 by NASD and other regulators involving mutual fund share trading and mutual fund share sales practices.
Regulators started looking harder at the $8.5-trillion fund industry after New York Attorney General Eliot Spitzer revealed widespread abuses in the trading of fund shares primarily by hedge funds, sometimes working in tandem with fund managers.
