Compliance February 12, 2009

FINRA Fines Wachovia for Sales Violations

Financial Industry Regulatory Authority (FINRA) said Thursday that it has fined two Wachovia units more than $4.5 million for violations related to the sales of mutual funds and unit investment trusts (UIT).
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More than $5.4 million has been returned to affected customers, according to a release from FINRA.

Wachovia Securities was fined $4.41 million for its failure to provide investors with sales charge discounts in eligible UIT transactions, its failure to ensure that investors received the benefit of Net Asset Value (NAV) transfer programs in applicable mutual fund purchases, and for suitability violations related to the sale of Class B and C mutual fund shares, according to FINRA. Wachovia Securities Financial Network was fined $150,500 for suitability violations related to improper Class B share sales. The fines reflect the $4 million-plus in additional commissions the firms received by selling Class B and C shares rather than Class A shares.

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UITs are investment companies that offer redeemable shares, or units, of a generally fixed portfolio of securities in a one-time public offering and terminate on a specified date. During the relevant period, UIT sponsors generally offered sales charge discounts to investors, known as “breakpoint discounts” and “rollover discounts,’ FINRA said.

FINRA found that Wachovia Securities failed to provide rollover discounts in connection with more than 15,000 customer purchases of UITs, according to the release. Furthermore, FINRA said the firm failed to provide breakpoint discounts in connection with approximately 5,000 customer UIT purchases, which resulted in customers paying approximately $2.71 million in excessive sales charges.

FINRA said each firm settled these matters without admitting or denying the allegations, but consented to the entry of FINRA’s findings.

“Firms must consider all relevant factors when recommending securities,” said Susan L. Merrill, FINRA’s executive vice president and chief of enforcement, in the release. “The failure to provide available discounts or recommend a suitable share class wrongly increases costs to investors. We are pleased that through these settlements millions of dollars are being returned to customers.”

Products February 12, 2009

AXA Launches Beneficiary Web Resources

AXA Equitable Life Insurance Company announced the launch of its new online Beneficiary Resource Center to help beneficiaries and advisers file a life insurance or annuity claim.
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AXA said the Beneficiary Resource Center offers the forms, tools, and guidance for beneficiaries and financial professionals to quickly and easily file a life insurance or annuity claim. The site also serves as a portal for information, checklists, and contacts to support beneficiaries through what can be an overwhelming period and to help them prepare for the next stage in their lives, according to a press release.

Integrated throughout the site visitors can find customer service contacts by product type and a list of offices by region, so that beneficiaries that require additional assistance or advice know who to call. Or, visitors can submit online requests for follow-up contact from a local financial adviser.

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The site, located at www.axa-equitable.com/beneficiary, features four sections arranged at each stage following a loss, according to the release:

  • Filing a claim: Here beneficiaries are guided on how to choose the correct claim form and gather additional documentation, if required, for their particular situation. Beneficiaries can download claim forms to complete, print and save online, at their convenience. They can also find answers to frequently asked questions about life insurance and annuities.
  • What to do after a loss: Arranged according to stages of need—from the first few days following a loss through the first year—this section offers checklists, notification letter templates and general guidance to help beneficiaries prioritize and keep track of the many legal and personal issues that will need their attention, from contacting creditors and Social Security and changing names on joint property to establishing or reviewing their financial plans.
  • The family love letter: Here beneficiaries can download and personalize a “family love letter,” a powerful estate planning tool that covers crucial issues beyond a will, such as establishing a guardian for children, declaring wishes regarding medical treatment and compiling financial and legal documents, contact information, and account access details. The family love letter is designed to help people avoid future confusion by organizing their thoughts, wishes, and assets, for the sake of those they care about most.
  • Additional resources: AXA said that because some beneficiaries may be embarking on a new chapter in life, the site also provides links to interactive calculators and useful Web sites, such as Idealist.org, Parentswithoutpartners.org, and MyRetirementShop.com.

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