NASD Fines Chase And MetLife For College Savings Plans Mis-Selling

NASD has fined Chase Investment Services Corporation and MetLife Securities, Inc. $500,000 each for failing to properly supervise the sales of 529 College Savings Plans. On top of the fine, the firms must compensate customers who were affected by the

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NASD has fined Chase Investment Services Corporation and MetLife Securities, Inc. $500,000 each for failing to properly supervise the sales of 529 College Savings Plans.

On top of the fine, the firms must compensate customers who were affected by the companies’ supervisory failures. Chase owes approximately $288,500 to 300 customers and MetLife will pay $376,000 to a similar amount of accounts.

“Firms must take steps to ensure that investors are aware of the critical features of the many different 529 Plans that are being offered today, so investors are better able to choose a plan that’s right for them,” says James S. Shorris, NASD executive vice president and head of enforcement. “Brokers must consider all relevant factors – including possible state tax benefits, investment choices and expenses, and more in determining whether a 529 Plan is a suitable investment for a particular customer. And brokers must disclose those relevant factors to the customer.”

NASD research found that from January 2002 through August 2004 for Chase and from January 2002 until March 2005 for MetLife – neither firm had specified procedures dealing with the sale of 529 Plans. During those periods, Chase sold more than $134 million in 529 Plans and MetLife sold more than $150 million. The sales were made by registered representatives who did not know the proper criteria when recommending 529 Plans. Neither Chase nor MetLife admitted or denied the findings, but consented to the settlement.

In October 2005, NASD also fined Ameriprise Financial Services $500,000 for similar mishandlings and ordered it to pay approximately $750,000 to customers.

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