Wachovia slapped with $2M fine
NASD has fined Wachovia $2 million for failing to adequately supervise its fee-based brokerage business.
NASD has fined Wachovia Securities LLC $2 million for failing to adequately supervise its fee-based brokerage business between 2001 and 2004.
The self-regulatory organization also ordered Charlotte, N.C.-based Wachovia to pay restitution to about 1,300 customers who were inappropriately allowed to continue maintaining fee-based accounts, or who were inappropriately charged account fees on Class “A” mutual fund share holdings for which they had already paid a sales charge.
NASD accused Wachovia of failing to put a system in place that would determine whether its fee-based Pilot Plus brokerage accounts were appropriate for its customers.
A NASD investigation found that 594 Wachovia customers, who conducted no trades in their Pilot Plus accounts for at least two consecutive years, paid the company approximately $1.9 million in fees.
Also, 620 Pilot Plus customers held assets of less than $25,000 for at least one full year and paid at least the minimum annual fee of $1,000.
In settling this matter, Wachovia neither admitted nor denied the charges, but agreed to NASD’s findings.
Wachovia had about $13 billion in its fee-based brokerage accounts as of the end of the first quarter, according to estimate from Cerulli Associates of Boston.
Wachovia announced last month that it will pay a 16% premium for St. Louis-based brokerage A.G. Edwards Inc. in a cash and stock deal valued at approximately $6.8 billion (InvestmentNews, May 31) .
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