Fidelity B-Ds fined for misleading G.I.s
NASD announced today that it has fined two Fidelity Investments broker-dealers $400,000 for preparing and distributing misleading sales literature promoting plans that were sold primarily to U.S. military personnel.
NASD announced today that it has fined two Fidelity Investments broker-dealers $400,000 for preparing and distributing misleading sales literature promoting plans that were sold primarily to U.S. military personnel.
NASD found that two Fidelity units — Fidelity Investments Institutional Services Co. and Fidelity Distributors Corp. — broke NASD advertising rules between January 2003 and January 2006 by preparing and distributing literature that falsely portrayed the performance of Fidelity’s Destiny I and II Systematic Investment Plans.
Fidelity Investments Institutional Services Company and Fidelity Distributors Corporation settled the action without admitting or denying the charges.
Under the settlement, for the next five years, the two broker-dealers at Fidelity Institutional are required to notify Destiny Plan holders that additional shares of the underlying fund can be purchased outside the plans without paying the additional creation and sales charges of up to 50% on the first year’s payments.
Issuance and sales of the plans, which typically require investors to make a fixed number of monthly payments over a 10- to 15-year period, were prohibited by Congress last fall.
However, previously sold plans remain in action.
Fidelity Investments is based in Boston.
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