NASD Regulation Fines Stephens Inc., $225,000 for Failure to Properly Supervise Distribution of Mutual Funds Sold on Bank Premises
Washington, D.C.--NASD Regulation, Inc. announced today that it has fined Stephens Inc. $225,000 and censured the firm in connection with the sale of the proprietary mutual funds of NationsSecurities, Inc., an affiliate of NationsBank N.A. A Stephens broker was also sanctioned.
Based in Little Rock, Arkansas, Stephens neither admitted nor denied NASD Regulation's findings that the broker/dealer failed to adequately supervise its employees in connection with the public sale and distribution of mutual funds. The mutual funds were sold mainly by NationsSecurities through the branch offices of NationsBank located throughout the southeast.
As part of its settlement with NASD Regulation, Stephens must hire an independent auditor to review the firm's supervisory policies and procedures, and then to implement the changes recommended by the consultant. Further, the consultant will conduct a mandatory training program in the new supervisory system for appropriate senior personnel and supervisors.
"Putting an end to abuses in the sales of mutual funds is a high priority at NASD Regulation," said NASD Regulation President Mary L. Schapiro. "With more investors putting their savings in mutual funds than ever before, it's our job as a regulator to ensure that they are treated fairly."
The settlement with Stephens was reached following an investigation of Stephens by the NASD Regulation District 5 office in New Orleans. NASD Regulation also found that Richard H. Blank, Jr. failed to properly perform his duties as supervisor of Stephens' employees who were involved in the promotion and distribution of the mutual funds. Blank, who also neither admitted nor denied the findings, was fined $10,000 and censured. He is also required to participate in the new supervisory training program referenced above.
"This case is a clear example of our continuing effort to protect investors by taking disciplinary action against firms and supervisors who violate NASD Regulation rules," Schapiro added.
The disciplinary action was taken by the NASD Regulation District Business Conduct Committee (DBCC) for District 5, which has jurisdiction over members with main and branch offices in Louisiana, Mississippi, Alabama, Arkansas, Tennessee, Oklahoma, and Kentucky.
NASD Regulation's investigation is continuing.