Finra fines AXA $600,000 over misclassified bond funds

Finra fines AXA $600,000 over misclassified bond funds
Funds sold to 401(k) plans as investment grade actually held lots of junk.
MAY 02, 2019
By  Bloomberg

The Financial Industry Regulatory Authority Inc. has fined AXA Advisors $600,000 and ordered the firm to pay approximately $172,000 in restitution for distributing materials that "negligently misrepresentated" five bond funds as investment grade when much of the portfolios consisted of junk bonds. Finra said that AXA will pay the restitution to participants in 401(k) retirement plans that offered the funds. As part of the settlement, Finra also required AXA to send corrective disclosures to all affected plan participants, Finra said in a release. (More:Investors flee high-yield bond funds and ETFs) "We remain committed to transparency and accuracy in all communications and we regret this occurred," an AXA spokesman said in an email. "We are pleased to have resolved this matter and are providing remediation to those who may have been adversely impacted." As a result of the misclassifications, AXA distributed thousands of enrollment forms, investment options attachments, and other documents to plan sponsors that were inaccurate and misleading, Finra said. Specifically, AXA distributed approximately 14,500 enrollment forms and 2,500 investment options attachments that misclassified the credit quality of the five bond funds between September 2010 and November 2015. The misrepresentations affected approximately 800 retirement plans and 6,200 plan participants.

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.