Five US brokerage houses are to pay a total of $625,000 in fines to settle allegations by the National Association of Securities Dealers (NASD) that they failed to halt late and unlawful trading in mutual funds.
The Washington-based self-regulatory group has fined D.A. Davidson & Co. $150,000; TD Waterhouse Investor Services Inc. $150,000; Stifel Nicolaus & Co. $125,000; National Planning Corp. $100,000 and SII Investments Inc. $100,000. In settling the allegations, the firms neither admitted nor denied them.
In a statement, NASD said all firms that it fined “permitted its registered representatives to process mutual fund orders after the close of the market.” The firms also failed to put in place systems to ensure that only orders received before the close were valued at that day’s price, NASD said.
NASD Vice Chairman Mary Schapiro warned that NASD will penalise firms that lack systems to detect illegal trading. “To help ensure that illegal late trading does not occur, firms must implement systems to guarantee that all mutual fund orders processed after the close of the market were received during normal trading hours,” she said in a statement.
NASD also cited D.A. Davidson & Co., for not complying with a year-old rule that requires firms to record the time that orders to buy and sell mutual fund shares are received. D.A. Davidson & Co. is a unit of Davidson Companies, a financial services holding company based in Great Falls, Montana.
Stifel Nicolaus & Co. is a subsidiary of Stifel Financial Corp., based in St. Louis, while TD Waterhouse Investor Services is part of TD Waterhouse Group, a subsidiary of Canada’s Toronto-Dominion Bank.
National Planning Corp. and SII Investments Inc. are among four independent broker-dealers owned by National Planning Holdings Inc., of Santa Monica, California. The holding company, in turn, is an affiliate of Jackson National Life Insurance.