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AXA Advisors Fined Over Needless Brokerage Fees

Reuters
Thursday, 6 Sep 2007 | 5:29 AM ET

A U.S. regulator said on Wednesday it has fined AXA Advisors $1.2 million for steering customers into brokerage accounts that triggered needless fees, once causing a customer's assets in an account to fall to zero.

AXA Advisors was also ordered to return $1.39 million in fees, and it voluntarily agreed to refund about $1.2 million more.

The company did not admit wrongdoing.

The Financial Industry Regulatory Authority said AXA Advisors, an affiliate of France's AXA, from 2001 to 2005 allowed many customers with low account balances, or who rarely traded, to open CapAdvantage brokerage accounts, though the accounts weren't designed for them.

AXA allowed customers with less than the required $50,000 of assets to open the accounts, and then assessed a $1,000 minimum annual fee per customer, FINRA said. One customer opened an account with just $2,000, and AXA assessed fees until the account was wiped out, FINRA said.

The regulator also said AXA let "numerous" customers maintain CapAdvantage accounts despite doing no trading for years. In one case, a customer who averaged more than $3.5 million of assets was assessed $73,000 of asset-based fees despite doing no trading between 2002 and 2004, FINRA said.

"AXA Advisors failed to put in place supervisory systems designed to ensure that its CapAdvantage fee-based account was appropriate," FINRA enforcement chief Susan Merrill said in a statement. "The firm also provided inaccurate information to brokers and customers about how fees would be assessed."

The $1.39 million of fees ordered to be returned will go to some 1,800 customers, FINRA said.

Mary Taylor, an AXA Advisors spokeswoman, said in an e-mailed statement the firm was pleased to settle and had completed restitution to affected customers. AXA Advisors also said it no longer offers the CapAdvantage product.

AXA Advisors has about 6,800 brokers and 1,700 branch offices, settlement papers show.

FINRA was created in July from the merger of the National Association of Securities Dealers and the New York Stock Exchange's member regulation, enforcement and arbitration operations.

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