The financial advisory unit of American Express will pay $7.4 million to settle charges levelled by New Hampshire’s securities regulator that its staff recommended model portfolios filled with in-house mutual funds without telling clients its agents earned more money by selling them rather than third party funds, according to a Reuters report.
American Express will pay $5 million in fines and penalties, $2 million in restitution to New Hampshire investors and $375,000 in costs related to the investigation. When the state charged American Express in February, it sought $17.5 million in fines and restitution. In e-mails, regulators found that the company was pressurising agents to sell American Express funds.
Earlier this year, American Express agreed to spin off its advisory unit, which employs more than 12,000 planners who sell financial advice, funds and insurance to roughly 2.5 million customers. Last year, New Hampshire regulators charged Morgan Stanley with having offered its brokers perks like raw steaks to sell more of its funds.