Regulator may take disciplinary action against broker
By John Spence, MarketWatch
BOSTON (MarketWatch) -- The National Association of Securities Dealers may take disciplinary action against A.G. Edwards Inc. over the sales of class B and C shares of mutual funds, the company said in a regulatory filing Monday morning.
The matter involves supervisory procedures and possible suitability violations, the company said.
Mutual funds often have more than one share class, and B and C classes can have higher expense ratios than the A class.
The St. Louis-based broker said the NASD has orally proposed a settlement, including a fine, the offer to switch customers to class A shares, and reimbursement for underperformance and the retention of an independent consultant to review supervisory procedures. Edwards said it is currently reviewing the allegations.
Separately, the NASD has advised the firm it has recommended disciplinary action concerning the sale of funds to individual retirement accounts (IRA) for which certain fund companies made additional payments to Edwards for sales. Regulators have been cracking down on potential conflicts of interest between fund companies and brokers who sell shares in recent years.
Edwards is the focus of previously-disclosed and ongoing investigations by state and federal regulators over compensation from fund families in exchange for pushing certain funds. The company is also being probed over alleged market-timing and late-trading infractions, which can harm long-term shareholders.
Edwards said the impact of the investigations will not be material to the consolidated financial condition of the company, but could affect operating results in one or more periods.
A company spokeswoman was contacted, but wasn't immediately able to comment on the investigations.
Shares of A.G. Edwards (AGE: news, chart, profile) gained 19 cents to $40.11 in early dealings Monday.