The National Association of Securities Dealers (NASD) has fined the US subsidiary of AXA $250,000 following allegations that the French insurer had overcharged mutual fund investors. Securities broker AXA Advisors LLC paid the fine for allegedly failing to inform investors that they were entitled to have sales charges waived under terms of some mutual funds.
There was no admission of wrongdoing. The NASD also charged Erik Mosholt, the AXA Advisors executive responsible for supervising investment products. As part of the settlement, the NASD said AXA would provide full restitution to any customers who paid unnecessary sales charges over the past four years, starting in February 2000. NASD officials say they have expanded the investigation to see if other broker-dealers have been overcharging investors in the same way.
Some US fund managers waive the sales charge for so-called Class A shares when an investor has paid a sales charge in an initial purchase, redeemed the shares, and then subsequently reinvested the proceeds in another Class A fund. Class A funds charge an up-front sales fee, whereas Class B funds charge fees over an extended period during ownership of the shares. AXA Advisors was charged with failing to obtain the sales charge waivers for its clients and of not having an adequate supervisory system to identify such benefits and make the information available.