NASD has imposed a $5 million fine on MetLife Securities, of New York, New England Securities of Boston and Walnut Street Securities of St. Louis.
NASD says the companies, all owned by MetLife, Inc., were found to be providing inaccurate and misleading information to NASD, allowing late trading of mutual funds, failing to produce e-mails in a timely fashion and other conduct that violates NASD rules.
NASD found that in response to an NASD inquiry in September 2003 concerning late trading of mutual funds, MSI, NES, and WSS provided inaccurate and misleading responses despite having learned information raising serious questions about the accuracy of those responses. The responses were coordinated by a working group consisting of employees from the three firms, staff from various departments of MetLife Group, Inc., and an outside law firm. Further, the MetLife Securities Firms learned additional facts over the next several months that contradicted their original responses, but failed until December 2004 – 14 months after they had originally responded – to provide NASD with corrected information. NASD investigators determined that approximately 800 late trades were allowed to take place.
“NASD relies on firms to respond accurately and promptly to requests for information on matters of regulatory concern,” says James S. Shorris, the Executive Vice President and Head of Enforcement. “Part of the problem in this case stemmed from the decision by the MetLife firms to respond to a regulatory inquiry by relying upon a committee without clear lines of authority or specifically identified individuals responsible for the adequacy and accuracy of information that was provided. The MetLife Securities Firms’ subsequent failure to correct the inaccurate information about the firms’ mutual fund trading practices and procedures – a failure that lasted for more than a year – compounded an already unacceptable situation. Ultimately, this case should send a strong message that NASD expects firms to provide accurate information to regulatory inquiries in a timely manner – and that failures to provide accurate information will draw severe sanctions.”